Lenders wont let me rent flat out!

Asked by Jayne.darlington, Portsmouth, VA Wed May 13, 2009

I am 7 months pregnant and my flat is too small for a family so I am moving into my partner's house. My mortgage lenders have refused me to rent the flat out so it is now on sale but with no luck at all after 2months. I suspect it will also be selling at a loss, giving me a possible £10k loan to pay the mortgage off! Where do I stand? HELP! I only have 2 months before I give birth and really dont want the hassle while looking after a newborn.

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Vicky Chrisn…, Agent, Purcellvile, VA
Wed May 13, 2009
Oh, bless your heart. As a mom of 4, I well remember the jumble of nerves involved in that part of your life.... adding something like this to it would have been enough to send me off the deep end.

I am just curious how they even KNOW that you want to rent the place out? Certainly, I am not advocating violating any loan terms. But, most people don't call their lender to ask permission, I honestly don't know what they normally say. I've seen people be told that if they are moving from house A and applying for a loan for house B, with the intent to rent house A, they will need to refi house A into an investment property before they will be able to get a "primary home loan" on house B. But, it doesn't sound like that is your situation.

If you do violate loan terms by renting the property, their recourse is likely limited to "calling the note" meaning making it due and payable immediately - but if they know that you won't be able to pay it, I do not believe they would "rock the boat" and force a property into foreclosure - they've got enough of that on their hands. Besides, I would say pregnancy is a change in your life that makes you reevaluate your living situation, and may force you to make changes in where you live. Why would you allow the place to sit empty when you could rent it?

By the way have you looked at options refinancing under HASP - see the link below. You might qualify for a refi which could reduce your monthly payment and help you out.
1 vote
Mary Weaver…, , Glenwood Springs, CO
Mon Jul 26, 2010
I'm sorry you are having to deal with so much in such a short time and in your condition. I am going to guess your loan with the bank had a clause you can not lease out your home. I usually only see this on reverse mortgages, but surprised they are restricting you based on today's economics. I think perhaps you may be behind in your mortgage? And someone from the bank may have seen your for rent sign posted or your ad to rent knowing you are possibly in pre foreclosure? If you are behind in your payments and possibly in pre foreclosure, and you have exhausted every avenue to refinance then your choices are very limited. The Bank does not want to have a renter with a year lease in place and have to go through the legal loops to have to evict your tenants if you do go into foreclosure and lose your home at auction. A lender has up to 6 years to decide to go after you to collect the difference between the sale or auction amount and the balance that was owed if in the negative.

I know some attorney's have suggested to give a deed in lieu of foreclosure and this may work out to your benefit, but only an attorney based on all your economic facts and estate situation can advise something like this and draft it so they release you of the difference owed and what it sells for. Use great caution and spend and take the time to discuss your options with a good Real Estate attorney based on your situation.
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