Bank called my Due on Sale Clause

[Kamil Maras]

Hi, I have been researching creative investing methods for a while now.  Through all of the posts and articles many claim that that banks do not call the loan due if the payments are made and the loan is performing.  
I recorded an Agreement for Deed with the city on my first wrap around mortgage transaction earlier this year.  Everything was smooth sailing until I applied for a new loan on another deal with the same lender.  And here comes an email that I have 30 days to pay off the loan that is being violated with the said transaction.  
My very first attempt at this interesting strategy and the worst case scenario.  Needless to say I will put that strategy to rest and would like to just put it out there that this happens so please have necessary funds to pay off the loan stashed in a separate account just in case.  But doing that I guess defeats the entire purpose of this endeavor.

[Jon Holdman]

First, folks, this is an older thread.

@Ryan Taylor the property has been sold.  So, no, the seller cannot just assign it back to themselves.  Its not theirs.  Refinancing is not an option, either, because, again, the borrower no longer owns the property.  This is the biggest risk with this strategy as a buyer in this situation.  They buy and make all their payments.  But if the loan is called, and the borrower cannot pay if off as was done here the lender will foreclose.  The buyers would need to refinance to generate cash for the seller/borrower to pay off the called loan.  If they cannot, they will lose the property despite doing nothing wrong.

Trusts may help hide what you're doing.  But they do not prevent the loan from being called.  This is a good example that shows bankers are not as dumb as people seem to think.  They had a process in place for managing their assets (i.e., outstanding loans.)  I suspect a trust would not have helped at all.  They would have seen the trust and poked right through it.