At a bank in Pennsylvania (USA) to get loan with house as collateral. This is for a small rental LLC with a couple of houses. While reading the agreement, much of it was commonsense, but a few things caught our attention.
Borrower...Authorizes...Clerk of any Court...For borrower (so any county clerk can an act on behalf of borrower)
The note contains a confession of judgement provision that would permit lender... Without advance notice. The undersigned...is knowingly..waiving these rights, including any right to advance notice.
Permit lender..again without advance notice..execute...by foreclosure
Waives all other duties of lender
The agreement also allows the lender to call for the entire debt to be due at any time. This is an interest only line of credit, the bank did not offer other LOC of options for commercial clients.
In short, this agreement would allow the bank at anytime to call for the loan to be due, declare it in default, ask the county clerk to act on behalf of borrower (LLC, cosigned by owners) and foreclose on the collateral house, all without advance notice.
The loan was not closed, it seems that assigning or waiving rights is a requirement of the loan.
Did we just pick the wrong bank, or is it standard practice for banks to require that you waive your rights before granting a loan?
Note: This loan was for well under the (low) appraisal on the collateral. Where all borrowers have good credit.