Financing in 80202>Question Details

glenmeyers, Home Owner in 80202

What is the penalty for renting your home prior to the one year occupancy rule?

Asked by glenmeyers, 80202 Sun May 22, 2011

What is the penalty for renting your home prior to the one year occupancy rule? We refinanced with the intent to live in the property eight months ago, but now we need to move and would like to rent the property. The mortgage company declined our request to waive the occupancy requirement. Thanks!

0 votes Share Flag Financing in 80202

Help the community by answering this question:


Glen - is it possible for one of the people in "we" who are on the loan could remain behind in the home for the remaining 4 months? If so, that would meet the 1 year occupancy requirement of your loan. I've had this same situation for a buyer with an FHA mortgage where the breadwinner's work relocated them 10 months after they purchased and gave them a month to for the wife to in the new location. Husband stayed behind and wife moved into temp. housing in the new area until the husband could leave and then they all purchased again with FHA financing.

I'm not sure if your loan is an FHA loan, or if both of "we" were on the loan and you'd have the financial ability to do that. But if you wanted evidence in writing that is all that is required, see:…

FHA Requirement for Establishing Owner Occupancy

At least one borrower must occupy the property and sign the security instrument and the mortgage note in order for the property to be considered owner-occupied.

FHA security instruments require a borrower to establish bona fide occupancy in a home as the borrower's principal residence within 60 days of signing the security instrument, with continued occupancy for at least one year.
0 votes Thank Flag Link Sun May 22, 2011
I agree with the other agents that you should get a good real estate attorney.

Best of Luck,

Ethan Besser
0 votes Thank Flag Link Sun May 22, 2011
What I like about this is that you are doing the right thing by contacting your mortgage company and trying to get the occupancy status waived. So thanks for being honest and opening dialogue even though now it probably seems like you should have maybe done some things under the cloak of secrecy. It always pays off to do the right thing.

Like some of the others have suggested you should have a way out of this if you have a circumstance where you have a "need" to move. Another attorney that you could contact is

John D. Carver, Esq.
Carver Law, LLC
Dominion Plaza
600 Seventeenth St., Suite 2800 South
Denver, Colorado 80202
Tel: (720) 932-8510
Fax: (720) 932-8509

I've worked with him and he's excellent and won't price you out of the water as some attorney's do.

Feel free to call with any questions. Once again I'm sincerely thankful to hear of someone doing the right thing even though it may be harder up front it'll pay off in the end.

Daniel Herron
Keller Williams Realty
0 votes Thank Flag Link Sun May 22, 2011
Hi, Glen,

All of these are good answers as to your need of a good real estate attorney. Before you go to the attorney, however, you should also have all of your ducks in a line.

That is, you say you "need to move out", but what is the reason? If you just "want" to move out, that puts a different construction on the problem than if you need to move out because of a job transfer, health reasons, additions to the family that make it necessary for you to move into a larger home (for example, triplets born after the loan was made), or some other such thing. Have all of your documents in order, so that the attorney will have a clear picture of your agreement with the mortgage company.

As Scott said, by requesting a waiver of the occupancy requirement, you have put the mortgage company on notice, and you must act accordingly. Don't delay -- stay put for right now and get in touch with a real estate attorney right away. Find out if there is any way the attorney can negotiate with the mortgage company for a modification of your loan based upon your "need".

Here's one excellent real estate attorney: Cyndi Lyden at Rumler Tarbox and Lyden, (303) 333-7733.

Best wishes.

Tracy Howard, CIAS, CDPE
Broker/Owner, Distressed Homeowner Headquarters
Denver, CO
0 votes Thank Flag Link Sun May 22, 2011
Glen -

You will want to first pull out your loan documents and then contact a real estate attorney. They will need to see what you have signed and what the terms of your note are. If you are in default with any of these terms then the lender does have the right to call the note due. You may want to explore either selling the property or refinancing the property into a non-owner occupancy loan. Non-owner occupancy loans typically have higher interest rates associated with them and may require more loan to value in the home. Either way don't rent the home out until you have spoken with an attorney and explored all of your options.
0 votes Thank Flag Link Sun May 22, 2011
Any default in the terms and conditions of your loan is subject to the lender calling your loan due. in other words, they will want you to pay off the loan based on this default by homeowner. If there is no prepayment penalty, you can attempt to do another refi based on income property conditions. It will be expensive since you just refinanced, but the alternative is worse. Hopefully you have some extra equity you can use to roll in these costs.
Web Reference:
0 votes Thank Flag Link Sun May 22, 2011
Glen the out come could be catastrophioc seriously-get legal advice-ultimately this would be considered loan fraud according to the loan documents and the lender could call the entire loan amount as due immediately or start foreclosure process based on you being in default. I know this was not intended however I woud encourage you to seek legal counsel immediately. If you need a great reference here is one; The Nesbitt Group, 303-346-4869. Good luck!
Web Reference:
0 votes Thank Flag Link Sun May 22, 2011
Please contact your Real Estate Lawyer, If they find you rented home the may be able to call the note due.
Check with a lawyer.
0 votes Thank Flag Link Sun May 22, 2011
If youput them on notice that you wer eplanning or would like to move, they could send someone to check and call in the loan in starting foreclsoure. Unfortanately you have to live by what you signe and agreed to ... it is an awful chance to rent know that they jnow you want to rent truning into a risky loan as it would then be an investment property.
Web Reference:
0 votes Thank Flag Link Sun May 22, 2011
Search Advice
Ask our community a question
Email me when…

Learn more

Home > Colorado > Denver County > Denver > 80202 > Financing in 80202 > Question
Copyright © 2016 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer