Financing in Philadelphia>Question Details

ajjoo, Home Buyer in Hellertown, PA

Owner - occupied house. Fulfilled occupancy requirement but lender denied request to rent.

Asked by ajjoo, Hellertown, PA Thu Jul 26, 2012

Hi. I have 'owned' (this term is worth laughing at in real estate) my house for the past 4 years. Refinanced 2 years ago and now have to move for employment reasons. I would like to rent out the property. Somewhere someone recommended that I ask the mortgage company (also read some horror stories online of when the lender found out and asked for the whole mortgage sum) and so stupidly I did only to find out that it is owner occupied and I can't rent the house. I tried to argue that the occupancy clause states that I have to be there for at least one year which I have. Either way this was just one of the customer representatives. So I wrote a letter to them and got a quick reply only to find out that it said the same exact stuff and a phone call later found out that they did not even have the document that I was referring to so I wonder what effort they put in reviewing my request. Called again and argued to no avail. Getting a lawyer. Please advise.

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13
Bob Stein’s answer
As far as I understand you do not need a lawyer. Nothing will happen. You will get a bill every month and you will pay it.
"Occupancy. Borrower shall occupy, establish, and use the Property as Borrower's principal
residence within 60 days after the execution of this Security Instrument and shall continue to occupy the
Property as Borrower's principal residence for at least one year after the date of occupancy, unless Lender
otherwise agrees in writing, which consent shall not be unreasonably withheld, or unless extenuating
circumstances exist which are beyond Borrower's control."
That is a clause . It is said - one year, it is also said - some circumstances beyond Borrower's control.
You are OK.
1 vote Thank Flag Link Thu Jul 26, 2012
Just confirmed with the attorney as well. Will go ahead and do it. Thanks all.
0 votes Thank Flag Link Fri Jul 27, 2012
The fact that it is a FNMA owned mortgage makes it even more clear that you can do what you want after the elapsed period of the occupancy clause.

I spent many years as a paramedic and people used to call 911 and then when we get there, they would ask if we thought they needed to go to the hospital. Regardless of whether I really thought they should; guess what the response was 100% of the time? Don't ask, just do.
0 votes Thank Flag Link Fri Jul 27, 2012
You lived in the house as your residence and now you want to rent it out. Unless your mortgage states that you must notify the lender, it is none of their business if you are paying them on time. On my co-op mortgage with Wells Fargo, it states that I must notify them if I rent out my unit. No where in the mortgage does it give them the right to say I cannot rent out my unit.
0 votes Thank Flag Link Fri Jul 27, 2012
I would just rent it out and stop kicking a bee hive. They will never put anything in writing that says it is okay to do anything, they won’t even tell you it is okay to make your payment on the 2nd. Try getting that in writing.

Jim Simms
NMLS # 6395
JSimms@cmcloans.com
Financing Kentucky One Home at a Time
0 votes Thank Flag Link Fri Jul 27, 2012
Dear Ajjoo,

The sale of the loan to FNMA does not change the terms of your mortgage. The written documents speak for themselves. They may want to not rent the home but I don't think that they can stop you if you are permitted by the documents to do so.

Let us all know what your attorney's advice is.

Bob Weiss
Broker Owner
Coldwell Banker Hearthside Realtors
215-776-1212
0 votes Thank Flag Link Fri Jul 27, 2012
Hi everyone and thanks for your help. I did hear back from them. Apparently my mortgage is 'serviced' by the bank but they have sold it to fannie mae so the restrictions for renting comes from them. obviously i signed the letter to sell the loan but it didnt mention anything about occupancy. Then they went on to say that they cannot permit renting however, if all is paid in full every month and there are no defaults then their policy is not to check ( again i feel like a dumb a$$ having called them in the first place). I do have a meeting with an attorney this afternoon.
0 votes Thank Flag Link Fri Jul 27, 2012
Thanks Phil for your kind words.

Better safe than sorry. A couple of hundred $$ in legal fees is money well spent in this matter.

Bob Weiss
Broker Owner
Coldwell banker Hearthside Realtors
215=776-1212
0 votes Thank Flag Link Fri Jul 27, 2012
Please if you do nothing else get an attorney. Mr Weiss who I know of has been in bussiness a long time and if need be would be one who's advice I'd follow. You see this is a problem that happens in the world of Refinance the only person there without representation is the home owner. So please get an EXPERIENCED Real Estate Attorney

Philip J. Cunningham Sr
V.I.P. Realty Corporation
7942 Bustleton Ave
Philadelphia,PA 19152
215-725-5700X49
Web Reference: http://www.GreatPaRE.com
0 votes Thank Flag Link Fri Jul 27, 2012
You should have an attorney review ALL the mortgage documents you signed. We do not know that these are standard FNMA mortage documents that were signed, nor do we know that some other document wasn't signed procluding the rental of this property.

Play it safe and spend a couple of dollars on an EXPERIENCED real estae attorney. The peace of mind will be well woth it.

Bob Weiss
Broker Owner
Coldwell Banker Hearthside Realtors
215-776-1212
0 votes Thank Flag Link Thu Jul 26, 2012
You should use the lawyer to sue the person that told you to call and ask. After you fulfill your contractual legal agreement with the occupancy clause, you can do whatever you want to do with it!
0 votes Thank Flag Link Thu Jul 26, 2012
I would love to however I would have to sue myself as it was my own stupidity of being extra wise and trusting the internet! Never ever ever do that again!
Flag Thu Jul 26, 2012
Your on the right road and as far as I know Bob is right. The smart way to go is with a Lawyer that does real estate If you need a referal to one just call me 215-725-5700 X49

Philip J. Cunningham Sr.
V.I.P. Realty Corporation
7942 Bustleton Ave
Philadelphia, PA 19152 215-725-5700 X49
PhilCunningham2004@yahoo.com
Web Reference: http://www.GreatPaRE.com
0 votes Thank Flag Link Thu Jul 26, 2012
Assuming your mortgage is a standard FNMA mortgage and note it has always been my understanding that once you fulfil your one year occupancy requirement you are free to rent the house, especially if you are moving for employment reasons.

I will however recommend that you meet with an experienced real estate attorney to advise you on this issue.

Bob Weiss
Broker Owner
Coldwell banker Hearthside Realtors
215-776-1212
0 votes Thank Flag Link Thu Jul 26, 2012
@Mrs. O'Neal taxes shouldn't go up "if you start renting it" so mortgage company doesn't care or even need to know. Your home owner on it might change (just notify your home owner insurance person "that property is non owner occupied now" and they can set it up) which might adjust escrow, might even bring it down. If your taxes do go up (maybe they do in your neck of the woods based on house use?) then, in essence, the mortgage company will receive a larger than expected bill, and increase your monthly payment to them to "catch up" for it the year after, so you'll still pay it, just a year late. If you don't want to "double pay" for a year and want to start paying immediately then talk to your mortgage company, maybe they can raise your payment rate.
Flag Wed Jul 27, 2016
Thanks Bob. I am in a similar situation as the person who initially asked the question about Owner Occupancy. My loan is a Fanny Mae. We have lived in our home for almost four years since made the loan with fulfills the occupancy clause. As of January we will not be using it as our personal residence. We might rent it out. Nothing in our loans says we can't. I just checked the clause. My problem is I'm worried about the taxes. I know they will go up substantially. I have already informed the tax office, and they have told me what my taxes will be. My question is if I don't tell the mortgage company how will they know to increase the amount taken for escrow? Does the tax office notify them?
Flag Tue Dec 9, 2014
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