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11-05-2009, 03:40 PM
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Mortgage underwriter didn't like lease back...
How common is this? Our lender required that we not lease the home back to the seller but take immediate possesion of it. Has anyone heard of this before?
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11-05-2009, 04:12 PM
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There could be many reasons why a mortgage underwriter might not be willing to allow the seller to leaseback the property. The seller gains many advantages from leasing back a property such as: exchanging tied up equity for cash, by being a better alternative to mortgage refinancing, and the financing rate the leaser receives my very well be better than the property owner can get which would allow a lower lease payment for the seller. All these taken into account, the mortgage underwriter might have calculated some of these benfits and decided that it wasn't to their benefit to allow you to leaseback the property.
Hope that helps!
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11-06-2009, 10:12 AM
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My guess is someone is on the wrong page of the training manual here. If you do this correctly there is pretty much no reason for the lender to care.
Doing it correctly means: A) You, as the buyer, has your home owner's insurance in place for closing. B) The seller MUST have a fully certifiable place that they are moving into on a date certain -- typically within a few weeks of closing on the place you bought. If they don't have this you DO NOT want to lease back to them as they could be in the house much longer than anticipated. C) The seller has to give you proof of renters insurance and a pretty sizable deposit for damages as well as failure to move out by the date set. D) You have to be in position to not need to be burdened with two mortgages or excessive rent payments -- ideally the payment(s) the seller makes to you will be at least equal to the amount of your mortgage & home owner's insurance. This is bad deal for the seller, and the intent is for them to, as they say on MTV, "get outta my house"...
The lender might want assurances that this is your primary residence to be very sure that you are not trying to pull a fast one with a mortgage for an investment property at owner occupied rates/terms. An affidavit should satisfy that. The "possession" of the property happens at close and your "occupancy status" is what they would need to verify, but honestly unless they suspect fraud, that is not something that lenders put much effort into at all... So long as you have a very obvious paper record of EXACTLY your intention (and that of the seller...) to accommodate the needs of the vacating previous owner the lender should BUTT OUT...
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11-07-2009, 11:15 AM
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Completely agree w/ the above poster. As long as you sign the note and trust that say you agree to occupy in 60 days, there is no reason to object.
Now, if you bought the place on a shortsale and the seller is to rent back, there may be concern you bought the home as an investment or to help the seller have a housing payment that is more affordable.
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11-07-2009, 09:46 PM
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Thank you for all the input.
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11-08-2009, 12:18 AM
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Basically many don't want to lend to a investment type property.Bascially people are mroe inclined to walk way from a investment that goes bad and the property is more likely to deteriorate as a secured asset.
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11-09-2009, 04:28 PM
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It is also called "Rent Back", several purchases a year I did as a loan officer involved this. This was do to the sellers not removing out an the closing day. Mainly due to them not able to move into the home they were buying (moving into).
On a purchase, as soon as the closing is over the property is yours. The bank has no business what you do to the property as long as they get paid.....
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11-10-2009, 01:26 PM
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Quote:
Originally Posted by megster1
How common is this? Our lender required that we not lease the home back to the seller but take immediate possesion of it. Has anyone heard of this before?
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Is this a short sale? |
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11-10-2009, 07:04 PM
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Quote:
Originally Posted by TimtheGuy
Is this a short sale?
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No, it's not. According to my agent it's pretty common in our area right now. |
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11-11-2009, 08:11 AM
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Quote:
Originally Posted by megster1
No, it's not. According to my agent it's pretty common in our area right now.
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How long are the sellers requesting to stay in the property after closing? |
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