Q: Can a lender force you into a loan agreement modification?
The 1 year construction period for a VA Construction to Permanent loan expired. VA allows for an additional 6 months. The lender wants me to sign a loan agreement modification for providing a fixed rate. The problem is that the construction is not over and under the original agreement, there remains a final modification to permanent to fix rate at current market rates. This modification does not address the construction period extension and appears to erase any previous agreements. It also has me fixed at 6 percent. It all looks wrong to me and I don't want to sign, but the lender said they will stop funding the project and possibly foreclose. Additionally, all documents in this modification appear to be supporting closing documentation. Help!
A: You took lender's money and the time to pay back the loan expired. So technically you are in default. You can sign and try to work it out, or not sign and lender will foreclose based upon your breach for failing to pay off the loan as the terms expired. You should have an attorney review the mod before signing or making any decision though.
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