Line Of Credit Agreement

Explain the difference between a promissory note, a line of credit, and a revolving credit agreement? Are they mutually exclusive? That is, might one be part of the other?

From the standpoint of the borrower, a promissory note is a debt obligation where the full amount if borrowed at one point in time and the payment obligation and interest are set forth in the note itself. Usually it will be due at some future maturity date, with the note being able to be called during certain contingencies. You may or may not be able to prepay it and it may or may not be secured (i.e., if you default, they may be able to have a priority interest in claiming secured assets or they may be pari passu with other unsecured creditors).

A line of credit is an arrangement where a certain maximum can be borrowed and you only pay interest on the amount borrowed (its sort of like a credit card).

A revolver is a variant of a line of credit where you pay a commitment fee on the maximum amount that may be borrowed and that otherwise is like a line of credit. They are not mutually exclusive in the sense that a revolving credit agreement is a type of line of credit. A promissory note is not a line of credit nor a revolver.

Often when banks lend to companies they'll put together a credit facility that will consist of a set of term loans (so essentially, promissory notes -- set amounts borrowed up front at stated maturities) and a revolver.

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2007-06-25 12:29:02 by collegemomagain

loan document signing video tutorial goes over the Equity Line of Credit Agreement, what it's purpose is, and how to describe it to a borrower.

Hi my name is Jane and I am living in Virginia.
I purchased a house in Woodbridge VA in Dec/2004.Tom was my mortgage agent. I made 10% deposit. (Contract amount was $535,000.00)
US Express Mortgage Company approved first and second mortgage (1st $374K and 2nd $107K). About two months after settlement I received check book from BB&T Bank (3rd lien - Line of Credit $125,000).

I called Tom (Mortgage Broker) and asked about the check from BB&T because I had never applied or asked Raymond to open a Line of Credit for this property. He said "Jane, you did not need a loan application and you didn't have to sign anything because you have a good credit and your Woodbridge house had an immediate equity right after you closed the deal. So BB&T approved the loan based on your excellent credit and equity of your house.

By the way I did not close the account and unfortunately I used the money.

December, 2008, the house was foreclosed (by 1st lien holder) and 3rd mortgage lender; BB&T Bank filed a lawsuit against me in the amount of $125K. I received complaint by mail in 01/15/2009.

* Right before foreclosure I requested all the documents regarding this loan to the entire lender including BB&T. (I was not sure what they have but I tried.)
Shockingly enough, there was a Loan Application which I have never seen and someone forged my signature.

BB&T Bank was not a wholesale lender. (BB&T had a wholesale department but I am not talking about them)/I didn't know at that time because Tom and Bank loan officer were acting like they are…/The loan officer had to contact with borrower directly but it didn't happen. Someone forged my signature in Loan Application, Credit Line Agreement, and Credit Line Deed of Trust (Notary Public? I don't know who she is and there was no seal)
So they foreclosed my house and also asked me to pay. Yes I did use the money. If I have to pay then I have to. But how about a FRAUD. (Forgery and violation of lender’s liability...
Q #1. What should I do? Do I have to pay them and bury that fraud?
#2. We have 2 years of statute of limitation for fraud in Virginia. Someone told me that when I received the checkbook from BB&T Bank I should have known that it was a FRAUD (He said this is common sense). What do you think? I confirmed fraud when I saw someone forged my signature on Dec.2008–My deference is –“Jane you did not need….. your excellent credit and equity of your house.”
#3.Can I fight with the lender for anything like-Breach of Contract or Fraud or Lender Liability… I don’t know.
Thank you so much

P.S. Just for your information, Mortgage Broker and the loan officer are in federal prison committing Bank Fraud, money laundry etc. But not for my case.

You questioned the line of credit initially and found out that it was a 3rd mortgage placed on your home.

Had you returned the money and then asked to see the loan documents you would have a good case. But instead you used the money (why not tell us what you purchased with it). You had full knowledge where the money came from at the time you received it.

Now that it is time for someone to take responsibility for that money you want to say.. "I never asked for it".

Too late. While you know now that your signature was forged, you had to know then as well. Not to mention the monthly payments you were or weren't making. This makes you an accessory to the fraud, like accepting stolen goods.

Bottomline.. you had NO problem using the money.. only paying it back...

2009-03-03 13:37:56 by Sung A

Price: $28.95 $28.95

I posted a question about this about a week ago, but am not getting anymore answers, and have found additional info.

I got a letter from VanCity stating that my original line of credit agreements (I have two, one secured) did not allow them to raise the incremental interest rate. Therefore, they enclosed two amendments to sign allowing them to change the incremental rate up 1% and allowing for additional increases any time they want. The worst of it is, they've put in the amendments that they can change any provision in the agreements at any time. Meaning, they can start tacking on additional fees, lower the amount etc. The letter goes on to say if I don't sign and get these amendments back to them by July 21, 2009, they will close down (demand payment) the accounts. One is my mortgage.

I have just contacted a lawyer, and he said because there is no additional consideration offered, the amendment is voidable. I would have to sign the amendments and then ask them to void them. If they won't, then I would have to take them to court.

I'm thinking this would be best as a class action suit because every member with a line of credit issued prior to March/09 was sent this letter and amendments.

Can anyone confirm, or deny what this lawyer said? What is the best/easiest way to get VanCity to reverse this for all members?

Hi, we also got this amendment letter from Vancity. We were so outraged that we couldn't believe how they would expect their
long term customers to sign this. We have been with Vancity for over ten years. So far we have refused to sign and we are waiting to see if they are going to proceed with their threat to take action on our line of credit. Definitely, we will go and get a lawyer to fight this. If anyone else want to start a class action suit, I will be really happy to join. I am quite busy at this moment, but we may be upset enough if they keep pushing us to sign this amendment that we will take this to the highest court,and Vancity's image would be totally
tarnished. They won't have any credibility if they think they can
force people to sign a very one sided, heavy-handed agreement like this. I hope there will be enough people out there strong enough to stand up to Vancity

2009-07-07 19:03:53 by Sparkybc

Price: $9.95 $9.95

Pyramid Products company has a revolving credit agreement with its bank. The company can borrow up to $1 million under he agreement at an annual interest rate of 9 percent. Pyramid is required to maintain a 10 percent compensating balance on any funds borrowed under the agreement and to pay a 0.5 percent commitment fee on the unused portion of the credit line. Assume that Pyramid has no funds in the account at the bank that can be used to meet the compensating balance requirement. Determine the annual financing cost of borrowing each of the following amounts under the credit agreement:

a. $250,000
b. $500,000
c. $1,000,000

c.
1,000,000 x 9% = 90,000 - this is the annual interest
1,000,000 x 10% = 100,000 - this is the compensating balance that is required. They will have to leave this money with the bank.
1,000,000 x 0.5% = $5000
So for $1M the cost would be $195K

following this same philosophy...
a. = 48,750 and b. = 97,500

2008-07-03 14:06:36 by Kris T

If my home home equity line is 15 years, and I have "renewal" provision in the agreement, for how long can I renew the line?

Most lenders will allow you to renew and keep on renewing up to but generally not past the normal retiring age for the country you are in.

I would expect that the answer will be in the small print of the contract you signed when taking out the original loan

2008-10-27 18:38:43 by smiling_chicka