Q: Can Wells Fargo demand a balloon payment on my mortgage in California

A: In California, it is uncommon for traditional fixed-rate or adjustable-rate mortgages to have a balloon payment requirement. However, there are a few scenarios where a balloon payment might be required:

1. If you have a non-traditional mortgage, such as an interest-only loan or a short-term loan, there might be a balloon payment stipulated in the loan agreement.

2. If you have a modified payment plan or a forbearance agreement with Wells Fargo due to financial hardship, the terms might include a balloon payment at the end of the modified payment period.

3. If your original loan term is coming to an end and you have not refinanced or paid off the remaining balance, the lender may require a balloon payment.

In general, California law requires lenders to clearly disclose the terms of the loan, including any balloon payments, before the borrower agrees to the mortgage. If a balloon payment requirement was not disclosed or was added later without your consent, you may have grounds to contest it.

If you are unsure about the terms of your mortgage or are facing a balloon payment that you believe is unjustified, consider contacting a housing counselor approved by the Department of Housing and Urban Development (HUD) or a qualified attorney specializing in real estate law to discuss your options and rights as a borrower in California.

A: Thank you for asking the question!

Balloon payments are severely restricted after 2013, however they are still being used for some types of loans such as Permanent loans.

Permanent loans are payable on demand or on a fixed maturity date (that are not construction loan).

1. permanent loans are typically made to:

a.Repay a construction loan refinance b. Existing debt encumbering the property; or

c. Provide funds to a borrower to purchase a property

Permanent loans may be structured in a number of ways to meet to meet the needs of the parties including monthly payments of interest only and all all principal do as a balloon payment on maturity.

2. Mortgages and deeds of trust on residential property are often for short periods of time (e.g., less than 7 years). But, a substantial final balloon payment is required at the end of the ter commonly borrowers hope to refinance at that time.

There must be a disclosure of balloon payment, actual interest rate, late payment penalty to the borrower.

This is merely discussion of CA general laws and not a legal advice. For a comprehensive advise, more specific facts and investigation are needed. I recommend you consult with an attorney in more detail.

Please let me know if you need further assistance.

Wish you luck.