Removing a second home rider from mortgage - how does it works?

[Anonymous]

OP Here. I just reviewed out loan application. We checked the box indicating the property will be a "second residence" based on the understanding with our broker that the home we live in (provided by my husband's employer) is our primary residence. We were told because the houses are not in the same location and we don't own the one we live in now, that this qualifies. We also selected the box indicating "no" we do not intend to occupy the residence as your primary residence - because we are not planning to move into the home at this time and make it our primary residence. I'm wondering we interpreted this incorrectly. But as I said, we told the broker our intentions to rent and live in the home at some point. And based on our conversations with the broker, we thought we were doing this right.

[Anonymous]

This is a real estate transaction so none of the verbal representations necessarily carry much/any weight (see the Statute of Frauds).

The boxes/Qs you refer to are not inconsistent with a prohibition on renting. You merely said (1) it's your second home; and (2) you're not planning to move in or make it your primary residence.

That completely (IMO) begs the question of whether or not you're permitted to rent it. The documents are silent about that.

So I still (I've posted once or twice above) think you need to see a real estate attorney in that jurisdiction (based on my 32 yrs. of legal practice including some real estate work) for legal advice (which this is not).

[Anonymous]

My SIL did this. They have rented it out for years. Her DH was rejected for citizenship (she is a citizen) so they can't move back just yet. As PP says, things change.

[Anonymous]

Omg. This is as bad as the people who overly rely on google. Lawyer up now op. when have you heard of the banks losing? Never.

[Anonymous]

I am in a similar situation; My broker knew from the very beginning that I was buying the house as an investment property yet when it came time to close the "second home rider" appeared. We were on our second extension and I knew the seller would pull the plug if we didn't close on time. I believe the brokers use bait and switch tactics to make their loans appear competitive to a real investment mortgage which should have a slightly higher interest rate and larger down payment. For example, a second home mortgage with an interst rate of 4% with 20% down would be comparable to an investment loan with a 5% interst rate and a 30% down. When you compare rates, the legitimate lender is trying to get you into the 5% 30 down loan because he knows your intentions. On the other hand, the shady lender might promise you 4.5% with 20% down and not tell you he/she is putting you into a second home mortgage until you're ready to close. In the end, the "deal" you thought you were getting turns out to be .5% higher rate and the second home rider restrictions.

[Anonymous]

I'm the OP. I was lucky enough to resolve my issue. I contacted the bank directly and actually had someone help me. In the end, I provided all documentation requested and received a letter in the mail about 2 weeks later saying we could rent our home. Receiving that letter was a major relief.

I also contacted my broker when I first found out about this issue. He was NO help.

[Anonymous]

Hi OB. I am going through the exact same issue. I bought a place from overseas and closed via POA. When I received the documents I saw the Second Home Rider for the first time. I bought the place with the intent of living in it when I return to the US. Now I don´t know what to do.

Can you elaborate as to what was the documentation that your lender asked for and how did the process work? What did they end up doing? Getting rid of the rider? Providing you with a comfort letter? How long did it take?

Thanks in advance for your help OB!

[Anonymous]

Anonymous wrote:I'm the OP. I was lucky enough to resolve my issue. I contacted the bank directly and actually had someone help me. In the end, I provided all documentation requested and received a letter in the mail about 2 weeks later saying we could rent our home. Receiving that letter was a major relief.

I also contacted my broker when I first found out about this issue. He was NO help.

Can you please report back to this forum as to how you accomplished this? I'm in your exact situation.

[Anonymous]

Anonymous wrote:Omg. This is as bad as the people who overly rely on google. Lawyer up now op. when have you heard of the banks losing? Never.

OMG - stop freaking out!! A little over the top don't you think? "Lawyer up now...." I mean come on.

OP, Banks do not have the time, inclination nor do they want to spend their resources on dispatching mortgage spies to see if someone else besides YOU is living in the house.

Just shut up and pay the mortgage. Done.