All Forum Posts by: David Sullivan

Hello there! Small update! None of it is good news lol. 

1. Mortgage company knows absolutely nothing. I do not know how else to explain that. I have called 7 times, and 7 different representatives and they do not know what to do. They all have said they do not know the "Special Loans Department" contact number. 

2. I have emailed and faxed the "Special Loans Department" since 10 days ago, and I have not received a single correspondence since. 

3. I went ahead and contacted my original lender, and she informed me that she is going to give my information over to the realtor who sold my home, because theres no equity in my home, and I may possibly have to either sell & lose money, foreclose or talk to an attorney, or transfer the entire loan into a business loan with a higher interest rate?! 

The reason I am confused is because it almost appears, there is some conspiratorial & diabolical plan to get me to lose my first rental property! My DPA loan literally states: 

"I also understand that if at any time before the. Maturity Date: (a) I sell, transfer or dispose of the Property or Home, either voluntarily or involuntarily; (b) I fail or cease to occupy the Home as my primary residence; (c) | die, or, if | am married, my surviving spouse dies; or (d) I refinance or satisfy the First Mortgage loan, then, upon the occurrence of any such event, the Principal amount of this Note shall become immediately due and payable in full without notice or demand." 

In this case, I "FAILED OR CEASED TO OCCUPY", resulting me paying the full $10,000 which is FINE!!! Although I do not have it in full at the moment, give me a date to work something out! Please excuse my frustration, its just super annoying that every single person (Lender, Realtor & Mortgage), keeps talking about foreclosure when this account is in good standing! It is not like I am purposely ignoring them or not trying to get this rectified! It almost appears that "they" are trying to profit from this!  

Quote from @Matt Devincenzo:

Tell us about this $10K second...the terms of that 2nd position note being unpaid unless you sell, refi or pay off the 1st imply to me that this may be a purchase grant or forbearance type 2nd. I know some of the purchase grants do include an occupancy provision. A friend and I were looking at a sub2 that included a HUD 2nd from forbearance that was due at the end of mortgage or when sold, but we never could clarify if the terms required the borrower to occupy....it seemed like it did from what we were able to find. The seller wouldn't share enough for us to truly get a sense of what those loan terms were, so we didn't move forward.

So any chance that this second has a permanent occupancy provision? I know that reverse mortgages do, and they actively monitor...seems like that could be where you agreed to stay more than a year and didn't realize it? 

Sorry that I missed this comment! You are 100% correct. They sent over the documents, and it was indeed the second mortgage. I am now in the process of waiting for further instructions, because the first thing I thought was I am about to lose this home. However, I called them, and they told me I have options in this regard, one of them being transferring loan into an LLC. They said its a special department and they are going to call back or I have to call before 9pm or something once I receive this document in my email. Once again, thanks alot for explaining. I will update soon.

Quote from @Jonathan Greene:

It's likely the downpayment assistance that is causing the issue. One year is the standard unless you take assistance or use a loan like NACA. Many of those companies require 5 - 10 years. No one is going to let you take money in lieu of your downpayment as a second loan and then move and make money on renting it without paying that off.

Hey Jonathan, you are 100% correct. I'm not trying to make excuses, however this is my first rental property, and it appears I made a mistake. After losing my job, and rather than having home go into foreclosure, I thought I could just rent out unit to save the home. I contacted my lender, and he said, firstly, you would not lose your home, as there are quite a few options in this regard, one of them being transferring loan into an LLC. I have to call be before 9pm or they are going to call, as it is transferred to a special department. 

I attached the section that states I must pay back amount in the event I ever cease to occupy home as a primary residence. I genuinely did not know this was in here, as I thought the only document in regards to the ownership of my home was my deed. They showed me it is a separate document. My lien/deed is the "First" mortgage, and the "Second" mortgage, aka "Downpayment Assistance Program", is listed as "Note". 

Sorry if it sounds like I am teaching this to you lol, which I am not. I am literally just writing out everything I learned today. Now I have to lose a couple hairs on what to do in the meantime, as I wait for further instructions from the lender. 

Thanks so much for even responding.  

Quote from @Chris Seveney:

Quote from @Matt Devincenzo:

Tell us about this $10K second...the terms of that 2nd position note being unpaid unless you sell, refi or pay off the 1st imply to me that this may be a purchase grant or forbearance type 2nd. I know some of the purchase grants do include an occupancy provision. A friend and I were looking at a sub2 that included a HUD 2nd from forbearance that was due at the end of mortgage or when sold, but we never could clarify if the terms required the borrower to occupy....it seemed like it did from what we were able to find. The seller wouldn't share enough for us to truly get a sense of what those loan terms were, so we didn't move forward.

So any chance that this second has a permanent occupancy provision? I know that reverse mortgages do, and they actively monitor...seems like that could be where you agreed to stay more than a year and didn't realize it? 

 I did not see the comment on $10k second but if that is the case and that is the lender that sent the letter - what I have experienced is we have bought loans that had seconds on them and have seen them and many of them do have agreements that state it must remain occupied by the owner or the loan becomes due.

So is the original poster posting the first or second lien?

 Hey Chris! You are correct. Although I did not confirm or deny I rented unit on the phone, the lender said it is indeed for the Downpayment Assistance. He said he can send it via email, by end of business day, not to panic, and to give a call before 9pm today once I receive the document. It is not for the "First" mortgage. 

Quote from @Drew Sygit:

@David Sullivan first, DO NOT PANIC!

Second, connect with the party that sent you the letter and inquire why they sent it. 

Recommend asking for their reasons in writing and tell them only the bare MINIMUM on the initial call. The call is probably recorded and you do not want to give too much info away at this point.

Once you know their reason for sending you the letter you will have a better idea of your options:

1) They sent it in error. 
- Be sure to get a recission from them in writing.

2) They have a legitimate reason for sending:
- You can inquire about how to apply for hardship given your loss of employment.
- If hardship is not an option with them, you may need to sell and negotiate time with them to do so.

Document every call on a Word or Google Docs, date & time of call, ask everyone you speak with for their full name, extension or ID #. You don't just want to write down you spoke with "John" because when you call back or reference "John" you may be told they have X number of Johns working there.

Do NOT ignore (@Chris Seveney not sure if you meant to advise "Ignore") the letter and get EVERYTHING from here on out in writing to protect yourself.

Hello Drew! Thank you for responding. I actually did exactly as you said. I did not admit to anything, and they agreed to send documents stating I am not allowed to rent out unit for the life of the "Downpayment Assistance Loan". However, they did say word for word: Do Not Panic, as I have options in the event I did rent it out. One of them being, but not limited to transferring loan into an LLC? They said that is a different department, and to call back after document has been received. Which I will do. Once again thank you very much! I will update soon.

Quote from @Nathan Gesner:

Quote from @David Sullivan:

Stop taking advice from strangers on the internet and listen to your mortgage lender.

There are certain loan products that will not allow you to rent the home. In my state, we have a downpayment assistance program that says you can never rent the property, ever. The only exception is if you request permission to rent it while simultaneously trying to sell it. Even that requires you to prove the need, gain permission, and provide updates.

Talk to the lender. Get the facts. Abide by the terms.

I agree! You are absolutely correct about listening to my lender. I contacted them, however I did not confirm nor deny I rented out the unit. They agreed to send me by end of business day via email, the clause stating I cannot rent out unit for the down payment assistance. They did tell me not to panic (word for word), as he said, in the event I did rent it out, it would have to be transferred into an LLC? Which I know nothing about. I just have to call back after receiving said documents. Thanks for helping!

Quote from @Matt Devincenzo:

Tell us about this $10K second...the terms of that 2nd position note being unpaid unless you sell, refi or pay off the 1st imply to me that this may be a purchase grant or forbearance type 2nd. I know some of the purchase grants do include an occupancy provision. A friend and I were looking at a sub2 that included a HUD 2nd from forbearance that was due at the end of mortgage or when sold, but we never could clarify if the terms required the borrower to occupy....it seemed like it did from what we were able to find. The seller wouldn't share enough for us to truly get a sense of what those loan terms were, so we didn't move forward.

So any chance that this second has a permanent occupancy provision? I know that reverse mortgages do, and they actively monitor...seems like that could be where you agreed to stay more than a year and didn't realize it? 

The second mortgage was “Downpayment Assistance” through the county. However, I still couldn’t find anything in my documents stating anything regarding the terms on this second mortgage specifically. I only have a receipt/document stating it is factored into the mortgage as a second mortgage. 

That is all I could find. Then again, this is only just after a few moments of research, and I haven’t called the lender, which I will be doing today. Thank you very much for your information as it helps, and i’ll update momentarily. 

Thank you all for your response! It definitely made me understand better. I am calling them today to get this taken care of. I will update you all in full momentarily. 

Hey there, after searching everywhere for my deed documents, I found this: 

"6. 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 determines that this requirement shall cause undue hardship for the Borrower, or unless extenuating circumstances exist which are beyond Borrower's control." 

Hello there! I received a letter from my mortgage company stating I am not allowed to rent out my property. My realtor, brother & lender (all different people) said at the time I need to live in the property at least one year before deciding to rent it out, which I did. I lived there for two years, I lost my job, and could not afford the mortgage payments. As soon as I lost my job, I did research on property management companies, and had it rented out in 2 months. Now I am receiving this letter, and I cannot find anywhere in the loan documents stating I have to live in property for the life of the loan. It is an FHA with a $10k second mortgage that I do not have to pay back unless I sell, refinance, or pay off mortgage. I know I should not google, because they will give the worst answer, and it is saying I am committing mortgage fraud, and that is literally not my intent! Asking for help please on what to do and it is greatly appreciated.