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Old 12-09-2011, 06:50 PM
 
6 posts, read 11,142 times
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Thanks. The insurance piece is my main concern, as the lender requires being named on the policy. So when I convert to a landlord policy (as I intend to do unless my homeowners policy doesn't require it) the lender will be able to see the change.
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Old 12-11-2011, 10:44 PM
 
49 posts, read 107,539 times
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First, you fully intended to occupy when you signed the refinance agreement, so there is no fraud.

Second, are you kidding? in this current economy, with the record number of foreclosures, whoever is holding your mortgage is just happy that your home isn't one of them. As long as you continue paying your mortgage, they could care less about intent.

Third, that's not what you should be worried about. If you plan on moving away and renting out your home, what you should be worried about is your tenants defaulting on the lease, or worse! and I do mean worse, especially since you won't be around to watch over your tenants, or your home.

I am a landlord, but my properties are close by, I screen my tenants carefully, and watch over them closely. My rentals are newly renovated, with all the bells and whistles, without the price. I'd rather earn a little less and know that my tenants are happy campers who want to pay their rent, because they like it living there so much. I also provide services, such as changing the furnace filters for them, which gives me an excuse to go inside and make sure they're taking care of my property.

But these are desperate times, and in desperate times, even people who are normally decent can do some pretty despicable things. and we're not talking just not paying rent, we're talking tenants who sell the appliances, rip out and sell the kitchen cabinets, and in the house right next door to me? The former tenants there actually cut all the water pipes, to sell for the value of the copper!

I know one couple who had 25 rentals, and so many of their tenants lost jobs, stopped paying rent, and it took as long as 6 months to evict a few of them, which resulted in that couple being unable to meet their financial obligations, and they ended up filing bankruptcy, and losing everything.

Trusting your property to an agent to secure tenants for you? In my opinion, really bad idea. In fact, I just went to court with an attorney last week, to evict tenants on behalf of some relatives, who had to rent out their home when his job transferred them to Florida. That was the 2nd set of tenants they had to evict from that house, and now my relatives have 2 judgements, for $5,000 and over $10,000. The agent was supposed to take care of that 2nd eviction, and never did. They paid that agent over $4,000 to manage that house, and yeah, my relatives may have a lawsuit against him, but they would have to find him first. Good luck with that, and good luck trying to collect on those 2 judgements too. those tenants don't have that kind of money. If they did, they wouldn't have defaulted on their rent payments.

Now, that's what you have to worry about, ok? Just saying...


Oh wait! there's more! In many suburbs, to legally rent out a house requires a rental certificate from the village or township the house is located in, and you don't want to rent without one, because otherwise, you may have a problem with legal recourse if you end up having to evict. Depending on where the home is located, building codes may be different for rentals than owner occupied homes.

To get our rental certificates, we had to do such whacky things as install a 2nd electrical outlet, literally 3 INCHES away from from the 1st, because it wasn't directly over the countertop. On another wall, we had to do it again, installing a 2nd outlet inches from the 1st, because the 1st was actually on the adjoining wall, and despite the fact that tiny bedroom already had 6 outlets, THAT wall needed at least 3 outlets. (why, oh why?) Then, they made us remove a 2nd driveway, and re-seed the entire area, because rentals are only allowed 1 driveway. Then, that electrical service may have been good enough for us, but for tenants, well, we needed a few more breakers for all the changes they made us do, and electrical boxes don't come in that size any longer, and so they made us install this whacky junction box arrangement that is so bizarre, even the village electrician we had come to inspect it shook his head and told us that the code officers are, and I quote, "off in their own little world".

Last edited by sarabeth1111; 12-11-2011 at 11:23 PM..
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Old 12-15-2011, 01:06 AM
 
936 posts, read 1,759,121 times
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This isn't legal advice, just my experience, as there are no guarantees.

I've been in the real estate business for about 25 years and used to broker a lot of REO properties that were owned by lenders. My partner and I went through every foreclosure filing in numerous counties for many years. Never once did we see a foreclosure filed as a result of violating some arcane terms of the mortgage. They were all as a result of the defendant not paying their mortgage.

Anything can happen, but lenders don't need any more inventory on their balance sheets and are even trying to figure out creative ways to let people stay in their home even when they are making erractic payments.

Nonetheless, it sounds like you had the intent to stick around and that's probably the main point. Be certain to purchase the correct type of insurance so that you are covered with any potential tenant situation.

Right now, your loan is likely to be handled by a servicing company with lots of employees who routinely receive insurance notices from their customers and are not as likely to figure all this out in these uncertain times.
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Old 12-15-2011, 04:46 AM
 
Location: Chicago, IL SouthWest Suburbs
3,528 posts, read 5,004,744 times
Reputation: 6112
A huge concern to me would be the difference between a rental prop and a primary home (taxes)
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