Is an assignment clause mandatory?

2013-08-12 09:17:13

Actually, the core question is whether a lender can generally call a properly serviced loan due, and if so, under what conditions? (Are there no lawyers here? Unfortunately, I can only view the topic from an economic perspective.) If that were generally the case, then all homeowners would essentially be in the same boat, regardless of the lender. That can’t really be. Another question is, of course, why the bank would do that? Hypothetically, calling the loan due would only be lucrative for the bank if it could invest the capital tied up with the borrower elsewhere at better conditions. This would be the case, for example, if the bank could invest "my" euros tied up for 20 years in some years at a theoretically higher interest rate in (safer) German government bonds with, say, only a 10-year maturity. If it came to that, the general interest level would also have to be significantly higher than today, so that the homeowner would then be forced into a much more expensive follow-up financing. Right?

Response from the real estate banker: Just take a look at the contract terms to see when the loan can be called due. It states 100% that termination is not possible for fun, but that an important reason must exist ==> You are not fulfilling your obligations. Then you actually have a bigger problem than termination because you don’t have money to pay your installments!!! So you don’t need to answer the second part of your question, because if the financing proceeds properly, there will be no termination. There are some banks that waive the assignment clause, and to my knowledge, no interest surcharge is charged for this.

2013-08-12 13:32:16

If payment default were the only "important reason," then it could simply be written that way. But to be able to wiggle out of everything in the end (when push comes to shove), it is phrased vaguely. "For an important reason."

With the statement of your financial expert, one is no wiser than before. Is that a friend or the same person who handed you the contract to sign? The statement sounds more like a salesperson than someone who can clearly explain this wording. Even if every bank includes the clause.

The answer would not satisfy me.

2013-08-12 15:02:10

The bank will not be able to wriggle out of this. Such cases have not occurred in Germany before! The grasshopper reports from the media always referred to non-performing loans, even though the article/report always portrays the poor homeowner who loses his home to the evil, evil bank. Below is an excerpt from "real" bank terms and conditions, which are used thousands of times in this or a similar form and over which no / never / under no circumstances can be negotiated.
Termination, however, is a completely different matter than the sale of claims!

P.S. By the way, I am the finance nerd myself and have been working in real estate financing for about 20 years

2014-09-02 22:23:58

Hello,

I don't know if the risk limitation law protects the borrower well. Who knows what will happen after the next crisis. I heard on YouTube that people have even taken their own lives because of it. Marriages have certainly been broken because of it, etc.

2014-09-02 22:36:20

Well, the list is neither current nor complete.

Not every loan sale is directly harmful or fatal.

As long as one fulfills their part of the contract, nothing can happen. And even after that, the buyer of the claim must be worse than the original creditor.

In some cases, banks are also "forced" to sell risks in order not to overburden their own risk-bearing capacity.

2014-09-02 22:42:22

Do you think the current list looks different?

Yes, all at the expense of the end consumer or borrower. The banks already have enough securities. They have the house, after all.

There are banks that also work without assignment clauses. You just have to find them.

Is an assignment clause mandatory?

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