Can a bank call a current loan if another loan it holds goes bad or they won't renew?
The terms of default are defined in the individual loan contract. If defaulting on another loan is there, yes they could call this loan. Similar reasons might involve the liquidity of the borrower. If one loan is in default and potential collateral may be lost, that could trigger a liquidity call. These are not common on consumer loans, but commercial loans have many ties to balance sheet numbers and the "financial health" of the borrower. Certainly if any loan is past due, a lender has reason not to renew an existing loan.
BankingQuestions.com is a free service made possible by the generous support of our advertisers. Advertisers are not responsible for site content. Please help us keep BankingQuestions.com FREE by supporting our advertisers. When you see an ad for a product or service you may have an interest in, click through to learn more.
Accounts
Article
Q&A
Podcast
Video
Blog
Discussions
PDF
Powerpoint
The terms of default are defined in the individual loan contract. If defaulting on another loan is there, yes they could call this loan. Similar reasons might involve the liquidity of the borrower. If one loan is in default and potential 