Lender calling loan due - Fannie Mae??

[Matthew Defore]

I read the following blurb in a BP blog/article. Question - can this happen on a fannie mae 30 year fixed loan? (if the property value drops, the lender calls due the difference on LTV):

"But during recessions, when property values slide, borrowers who had been at max leverage (often 75 percent LTV) find themselves having to pay down their loan to meet the required LTV.

What does this mean?

Basically, if you bought a property for $1,000,000, and the lender’s max LTV (leverage-to-value) is 75 percent, they will give you a $750,000 loan. But if for any reason your property value drops to, say, $900,000, your $750,000 loan has now increased to 83 percent of value. So, the lender will require you to pay down the loan to get to 75 percent LTV."

[John Warren]

@Matthew Defore this happens on commercial loans when the borrower reaches the loan term and has to refinance. I know several investors locally here in Brookfield and Berwyn who had to bring money to refinances in order to keep good, performing buildings during the last recession. With conventional loans for 1-4 units you don't have to worry about this. Once you lock in the debt you are set for the next 30 years.