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Making Late Payments on Mortgage Loans

Georgia case illustrates potential effects of missing loan payments.

Background. The Georgia Supreme Court ruled that a bank's failure to reject and return late payments made by a church on its mortgage loan did not prevent the bank from foreclosing on the church's property. A church purchased property on which it operated worship services and church activities. The purchase was financed by a local bank which retained a mortgage to secure debt for the amount of $184,000. The church signed a promissory note agreeing to pay the principal in 34 installment payments of $2,003 followed by a balloon payment of $166,000.

A few years later, the bank informed the church that the balance of the note would be accelerated unless the church paid $10,000 to cover past due amounts. Specifically, this amount was needed to cover the nonpayment of two monthly payments plus a check the church had issued that had been returned for insufficient funds. The bank gave the church ...

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Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

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Posted:
  • January 1, 2002

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