While some people may know that a foreclosure notice is coming, others can be blindsided by changes in their real estate loans that happen as a result of changes at their respective financial institutions. The financial crisis in the last few years has resulted in a number of mergers and acquisitions at various financial institutions further complicating the foreclosure process in the U.S.
Readers in Worcester, Massachusetts, may be interested in this story involving a threatened foreclosure after a bank acquisition. A 59-year-old U.S. Army veteran is now facing possible foreclosure on his Massachusetts mobile home park from People’s United Bank. According to the man, his 35 acres, 15 of which are actually developed, are his largest financial asset that has been appraised at $1.1 million. However, according to the town assessor’s website, the property is valued at $840,100.
The man reportedly borrowed $490,000 from Flagship Bank and Trust Co. in a 20-year commercial loan at a steep 8 percent interest, in early 2007, to pay off some debts and make property improvements. He has since been up to date on his loan, making monthly payments of over $4,000.
People’s United Bank acquired Flagship in the summer of 2007 as part of its larger purchase of Chittenden Corp., costing $1.9 billion. The veteran did not have any changes made to his loan, despite the changes in the bank, until this year when he received letters asking for financial papers and then a letter in April requiring that the full amount due on the loan, over $430,000, be paid.
According to the man, he received a notice in August from a lawyer stating that the loan had defaulted and that the interest had also been raised to 10 percent. Furthermore, the man’s lawyer received correspondence saying that if the loan was not paid off 45 days from Sept. 5th, the bank would start foreclosure proceedings.
Those facing a foreclosure should make sure to understand all of their rights under the law, as well as the responsibilities of the lender or bank. The man will need to refinance the loan in order to pay off the existing loan and avoid foreclosure, whether he will be able to do that however, remains to be seen.
Source: Telegram, “Bank acquisition leads to a threat of foreclosure,” Aaron Nicodemus, Oct. 14, 2012