This isn’t true. They aren’t free to refuse service to protected categories of people. They can’t legally discriminate on the basis of race, or sex, for example.
Let’s say our centurian gets his $500k loan and manages to pay down $150k of the principal before shuffling off this mortal coil. Unfortunately his heirs lack the creditworthiness to refinance the remaining $350k. The bank takes possesion of course, but what of the equity that was already created? I doubt that anyone but the bank would be happy with the bank getting a $150k windfall.
I would assume that the bank sells the house to cover the debt and any remainder goes back to the estate to be distributed among the heirs.
Strangely enough, a 30 year loan doesn’t mean anyone expects it to be paid off in exactly 30 years. It’s just a term that defines the interest and amortization payment amount. Few 30 year loans actually make it to term; they are refinanced, bought off, transferred, or paid off when the property sells.
But in a practical sense, since the hassle of handling some of these arrangements can be costly, and since the life expectancy of a 100yo man is measured in days, not years, a bank might want to put some special conditions on a 30 year mortgage loan – higher rate, greater collateral, payoff penalties, etc.
No, the bank doesn’t take possession of the house. The estate does. The estate continues to make mortgage payments until the estate is disbursed. The bank doesn’t take possession unless the estate defaults on the mortgage.
Yes they can they can refuse service to a black person if they want. Not because he is black of course but just because they do not need to give a reason.