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What happens when a loan matures?
In a typical market, the borrower repays the balance on the loan through new financing, sale of the asset, or an equity infusion. In commercial property in the current economic environment, banks are doing things a little differently. The probability of refinancing the loan through another lender is minimal if the underlying collateral is insufficient. A bank with a maturing note may choose to "extend and pretend" if the loan guarantors have sufficient financial wherewithal. A more aggressive lender may demand a pay off. If the payoff doesn't happen, they could put the loan in default and foreclose on the loan.
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∙ 14y ago
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What is the definition of 'loan repricing'?
When a loan matures, the principle of the loan is repaid and lent at a potentially new rate, hence the term "repricing."
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The loan will be a default loan
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What happens if collateral used for loan is sold before the loan is repaid?
You are still responsible for paying the loan as before.
