questions & answers

Question: We are senior citizens. A bank is offering us a home loan that we assumed was fixed interest-the rate dropped a fraction, even-then I happened to notice an unfamiliar phrase with a tiny checked box-'demand feature'. I looked it up: the bank can demand payment, calling the loan, at any time without giving a reason. It said that some states prohibit that practice. Is Arizona one? Calling the loan could destroy us and force the property into foreclosure.

Answer: Demand loans are rare now. They require special Truth-in-Lending disclosures. It could be that checking the box was an error and it is not a true demand loan. You should start by going back and reviewing your promissory note you signed and the disclosures made in your loan. You should also follow up with your loan agent at the bank to confirm this. If it is a demand loan, you should have a professional verify that the appropriate disclosures were made to you under truth-in-lending.