From time to time I run into some important information that should be given more exposure among the audiences that follow my blog. The following was given in response to a question from a rental owner that had concern that a lender representative was stopping by their rental property unannounced and their visit was unnecessarily concerning their renter. I found this reponse informative and worth repeating to rental owners, renters and real estate investors. Thank you Michele. Neil
, Mortgage Broker or Lender, San Diego County, CA
In answer to your question about lenders checking the occupancy; it is a relatively new policy. It is happening due to individuals taking out an "owner occupied" loan which is a better interest rate than loans for investment property. Then they rent the property instead of moving in.
What they don't realize is that lenders check the occupancy and can call the loan due for loan fraud. It doesn't sound like this in any way applies to your case; and more likely it may be a new policy of lenders in your area possibly making sure that all rental properties are occupied. Lenders want to make sure that properties they have loans on are not abandoned as many were during the mortgage meltdown.
Loans on investment property are considered by lenders to be riskier and deserving of higher interest rates than those on owner occupied property. A lot of this is due to the mortgage climate and because it is easier to walk away from a rental property than your own home when it becomes tough to make the payment. Like if you lose your renter and can't get another tenant quickly.
In your particular case it sounded very odd that they would not provide your tenants with ID and a business card. Like some of the others that answered your questions, I agree that it also is possible that your home mistakenly ended up on the foreclosure list and those that showed up were potential buyers if the bank took the property back.