Originally posted by @Bill Gulley:
The OP has a secondary market loan, the requirement to call it comes from the servicing agreement, not interest rates. A portfolio lender may decide considering interest rates, but a note under servicing that has been sold will get tripped by the servicing requirements, not interest rates, a servicer may have no choice and they aren't getting the interest rates the bond holders are, or the holder of the note.
While the Act was passed in the early 80s during high interest rates, to keep the lender's interest rate risk manageable as folks were assuming payments, that is not the case today, the issues are legal aspects of notice and foreclosure, clogging the security and servicing agreements set by note or bond portfolios. A bank servicing their own portfolio may look at it from an interest rate risk standpoint, but that is not the only or primary concern. :)
As a banker, I'd like to interject my thoughts, which come from a bank's point of view. The above information is correct, but only part of the story. The notion that a bank will not call a performing loan due is absolutely incorrect. Whether it's a real estate loan, a C&I loan for working capital, loans for equipment, or revolving lines of credit it goes through a similar process. We are constantly reviewing our portfolio of loans, grading their risk weightings, and deciding what (if any) actions we need to take. This happens on all loans, regardless of their status of paying as agreed or not.
The motivations for doing this are many, but one that is extremely important, but almost never mentioned here is how Bank Examiners view our portfolio risk. Bank Examiners require us to have a risk weighted portfolio within the parameters. A loans risk weighting changes with updated financials, borrowing bases, change in ownership, collateral changes, etc.
If you change ownership of a property by quit claim deed, it vastly changes the risk weighting of that real estate loan.
I could talk for days about the inner workings of AND how misunderstood banking is by many people but that's another thread.
