Posted by JPiper on December 05, 1999 at 11:03:52:
William:
Remember?.there?s a distinction in this loan if it is what I think it is. Bond money is first time buyer money?..and is for owner occupants. Typically the requirement to assume is non-qualifying in terms of the FHA loan (if it is originated prior to Dec 15 1989), BUT the bond money part of the deal requires that the buyer be a first time buyer and an owner occupant…and is approved a separate state agency from HUD. Here, that agency is named Missouri Housing Development Corporation (MHDC). First time buyer for the purpose of this type of loan means someone who hasn?t written interest off on their tax returns in 3 years. HUD is not the ONLY regulatory body handling this type of loan. Approvals are issued at two levels…HUD and MHDC (or whoever it is in your state). Also keep in mind that there are variances in these programs between programs and probably between states. Again, read the documents.
A few considerations. I know all kinds of people renting out houses that have loans of this type on them. But then again, these houses are not under the microscope. This one is. This lady has evidently stirred things up enough that the lender is now ?mobilized??.perhaps the lady has even missed a payment of two unbeknownst to you.
One approach that could be taken here would be to do a ?streamline? refinance on this property. FHA has a program which allows ?non-qualifying refinances? on old FHA loans. The seller could refi with this program which pays the old loan off?.removing the problem concerning renting the property, first time buyer, etc. However, in doing this you create a new problem?.an FHA loan that now is qualifying?.it has a due on sale clause. Personally I think this one is easier though than the first time buyer, owner occupant thing.
The other choice here is to obtain an option on the property. Find the buyer. SELL to that buyer allowing THEM to take over the loan. AGAIN, they will need to be first time buyers and owner occupants. You can create notes for the equity involved.
No matter how hard you try to push the round shape of a lease/option into this square hole?.it won?t fit. So what? You can accomplish the same financials in another way.
Can this REALLY happen to a non-qualifying assumable FHA loan? - Posted by WilliamGA
Posted by WilliamGA on December 04, 1999 at 19:41:23:
Hello all,
I have a seller that I am signing up a L/O with. She is a tired landlord who is in the middle of an eviction as we speak. I am scheduled to take over when her tenant is out next week.
She called me tonight for advice. Seems her mortgage co called her this week saying that her house that she has been renting out the past 2 years (she lived in it for 13 years before building her new one) is an FHA loan and she must live there or sell it. She told me that when she started renting it out she made the change over from homeowners ins. to landlords ins. and nothing was ever said by the mgt company until now. All her payments have been current and her loan bal is apx. 29k right now. She said the mgt. co told her they are sending an inspector out next week to see if she is living in the house, and if not, she has 30 days to pay off or produce a sales contract. She said she told them that she doesn’t have the money to pay off and selling could take 6 months or more, what then. They told her that is she could show that she was trying to sell, they would grant her “permission” to rent to cover the pmt until she could sell.
Has anyone ever heard of such BS??? I mean, this is a non-qualifying assumable FHA loan!! She could sell to any Joe on the street and they would have no say about it, how can they tell her she can’t rent?
I am calling on all you RE geniuses out there to tell me what to tell this lady. I told her that I was not an atty, but that I just didn’t think this was so.
Once she signs the lease option, exsercise your option and then get a new first. If the LTV is right, around 75% or less, you are in the clear. All she has to show is a sales contract. Agrue that the lease/option is just that.
Maybe they can and maybe not. As Piper and some of the others posted, it might be provided for in the original loan documents. That said, I doubt that the folks at HUD want 15 year old loans that are current, called in for any reason. A call to your local HUD area servicing office might get you an answer and also a phone call to the mortgage servicing company.
In any event, doesn’t the sale to you, (as Jim said) solve her (and your) problem?
Re: Can this REALLY happen to a non-qualifying assumable FHA loan? - Posted by JPiper
Posted by JPiper on December 05, 1999 at 24:16:32:
Yes William?.this can happen. Here?s how.
First to be a nonqualifying FHA loan it must be originated prior to December 15, 1989. So far so good. There is NOTHING within the FHA loan itself that would create a problem in terms of renting.
BUT, this loan could have been couple with some First Time Buyer Bond Money. Bond Money is a separate layer of paperwork?.and typically is ONLY assumable for owner-occupants. Bond Money way back when was typically coupled with FHA AND VA loans. I?ve seen BOTH. Some Bond programs create a buy down in the interest rate?.others subsidize the down payment. But all the bond programs that I?m aware of REQUIRE owner-occupants.
There?s one way to know. READ THE DOCUMENTS. Chances are this lender is not kidding.
You can still work a deal. But it?s going to have to be a deal that ends up with an owner occupant in the house who has the deed. Get it?
Posted by Jim IL on December 04, 1999 at 22:14:26:
William,
You said that you were targeting this as a L/O?
Well, now it sounds like the “seller” has a problem, and YOU can fix it!
Take over that loan (it is a No Qual right?), and if there is equity and she wants it, have her take a note on it.
This way the home is sold, and the lender can go pound sand.
Re: Can this REALLY happen to a non-qualifying assumable FHA loan? - Posted by d.henderson
Posted by d.henderson on December 04, 1999 at 21:51:32:
Yep! That’s right. She has to live there, BUT usually as long as you try to sell it you can rent it. We were in the same position with the first house that we had. So as long as I kept it listed, there wasn’t a problem. And if I sold it great! Finally paid it off, but the answer to your question is yes, they can do that. Frankly I think that they make it up as they go. Had some people living in a forclosed house. The owners had been moved out, so these squatters came in and lived there for 1 year with nothing happening. Yes, they were notified, they didn’t care. So they just enforce what they want.
Sorry I didn’t have any ideas except try the listing thing if you have a friendly agent.
Dee-Texas
Re: Can this REALLY happen to a non-qualifying assumable FHA loan? - Posted by WilliamGA
Posted by WilliamGA on December 05, 1999 at 10:08:05:
Irwin,
Yes, you are right. The sale to me would solve both our problems. The L/O deal was really sweet, though. I was to cover their 300.00 per month mgt pmt and I would have been able to sell it on a long term L/O for 600.00 per month. 300.00 per month cash flow AND 12k plus backend for me.
Re: Can this REALLY happen to a non-qualifying assumable FHA loan? - Posted by WilliamGA
Posted by WilliamGA on December 05, 1999 at 10:12:34:
Jim,
I’m sure I am overlooking the obvious, but how will I avoid the same problem she has? If I buy, assume her FHA loan and get them to take back a second (I feel like they will, they just want to be rid of this problem) I will not be the occupant, either. I will sell it on a L/O and it will probably be at least a year before it is refinanced.
Re: Can this REALLY happen to a non-qualifying assumable FHA loan? - Posted by JohnBoy
Posted by JohnBoy on December 05, 1999 at 24:57:20:
Do those first time buyer programs using Bond Money have any time limits on them? I’ve heard of them being used here recently and my understanding was that you would be required to occupy the property for 10 years. After that you were no longer obligated under anything pertaining to the Bond Money that was used. Would this be a different program from prior to the ones in 1989?.
Re: Can this REALLY happen to a non-qualifying assumable FHA loan? - Posted by WilliamGA
Posted by WilliamGA on December 04, 1999 at 22:07:55:
d.
But how can this be on a non-qualifying loan? I just dont understand it. They have paid on time for 15 years and now it is an issue. They could sell it to someone who will never make a pmt. Just doesn’t make any sense to me.