What is a Call Provision?
The call provision is an important component of various types of debt agreements that provider the issuer of an agreement to exercise the privilege of calling or retiring the debt at some point before the maturity date is reached. While many types of callable agreements grant only the right for an early retirement of the entire outstanding amount, there are some examples of the call provision that allow the issuer to only call a portion of the remaining balance due. One area in which the call provision is included is a matter of course is in many home mortgages. As part of the bond’s indenture specifications, the call provision allows the institution that holds the mortgage to call for full payment ahead of schedule, assuming that the conditions governing the call are met. Similar to an acceleration clause, the call provision can be implemented in situations where a default on the mortgage has occurred, or other factors have taken place that convince the lender that calling for the rem
Call provision is another negative term that is included in traditional bank loan agreements. It gives banks the right to “Call” meaning balloon your loan regardless of the fixed period on your loan or if you are current with your monthly mortgage payments. In Metro Detroit we are witnessing this more and more as local bankswant “out” of businesses that are automotive related.
Related Questions
- If the issuer of an ABS has an option to redeem such ABS prior to the maturity date (other than pursuant to a customary clean-up call), is the ABS eligible to secure a TALF loan?
- If the issuer of a ABS has an option to redeem such ABS prior to the maturity date (other than pursuant to a customary clean-up call), is the ABS eligible to secure a TALF loan?
- What is a Call Provision?
