Re: Lender guilty of - Posted by JohnBoy
Posted by JohnBoy on November 15, 2000 at 23:02:15:
The main issue is what your intent is. If your intent is to just tell the lender you intend on living in the property while knowing you really don’t intend to, then your lying to the lender by deceiving them to make a loan.
There may be a case where someone was planning to live in a new home they wanted to buy. They buy the home with the intent to live in the property. They assumed by the time they close on the purchase that they would have sold their current home they occupy. After closing on the new home, they still haven’t sold the old home. Since the old home hasn’t sold and since they can’t afford to pay two mortgage payments, they decide to try and rent out one of the homes. With being in a financial bind having to make two mortgage payments, they decide to rent which ever home they can get a renter willing to take first. They find a renter that wants the newer home they just purchased, so they go ahead and rent that home out until they can sell the older home. Their original INTENT was to occupy the new property. Since unforeseen circumstances with being unsuccessful in selling their first home has caused them financial problems, they ended up having to rent out the new home they just purchased. They intended to truely occupy the property. Under the circumstances it would be hard for the lender to prove they never intended to live in the property.
In your case, you know going into the deal that you don’t have any intentions of occupying the property. Your argument is that someone just happened along that wanted to just rent the property from you and made you an offer you just couldn’t refuse! Personally, I think you have a weak case with that and you could end up with the lender calling your loan due or possibly claim you frauded them by lying on your loan application and by signing papers that you claimed you were going to occupy the property. Also, most mortgages have a clause in them stating you can not rent out the property for one year or they could call the loan due.
Can you get away with it? Maybe. Do people do it all the time? Some do. Do they ever get caught? Some do, some don’t. The question is, is it worth it and are you willing to assume the risk of being one of the ones that don’t get caught?
If the lender was to find out, you can be sure your friend the mortgage broker is going to deny knowing anything about this. YOU are the one that has to sign everything, not your broker friend.
Quite frankly, your broker friend is WRONG! The problem isn’t with whether you will occupy the property or not. The problem is your BROKER FRIEND! It’s obvious he doesn’t have any relationships with the RIGHT lenders to accomplish what you’re trying to do. There are lenders out their that will finance the borrower without them putting any of their own money down. They will allow the seller to carry back a second in lieu of the borrower putting anything down. There are a lot of lenders that will do 5% down for non-owner occ. This of course will all depend on the borrower, how strong they are, what their credit is like, etc.
How many times do you think you can get away with doing this and just continue to tell the lender, “You won’t believe this, but this guy just happened along and wanted to rent my new property that I’m supposed to live in and just happened to offer me such a good price on rent he would pay, so I couldn’t pass it up, sorry!”?
The biggest issue here is, what your morals are, your conscious, how well you can sleep at nights and if it’s worth worring about everyday whether the lender will ever find out about it. It’s sounds obvious your broker friend isn’t much of a friend to put you at risk over this just so he can make a quick buck off it!