Craziest situation !!!!

Discussion in 'Credit Talk' started by szccdw, Aug 5, 2003.

  1. szccdw

    szccdw Active Member

    Here is my dilemma. I just received a letter in the mail from an attorneys office telling me that "the city" I live in is going to file to foreclose on my house because I am renting it out. They said that when I went through there first time homebuyers program part of my stipulations were that i did not rent the house out. When i lost my job and my payments got behind and i called them to get a approval to refinance (for some reason you have to get their written permission if you used their program before you can refinance) they said no that they felt refinancing was not beneficial to anyone. When I explained I could lower my monthly payment by about $250 and remain in my home they still said no. My only other option was to rent it out or I was going to lose it. All payments since that one 90 day past due have been on time. They said they only way they will not foreclose on me is if I give them 58000 in 15 days. If I had that i wouldn't be renting out my home. I have a meeting tomorrow with the Director of the program. I have never in my life heard of someone who is making their mortgage payments getting foreclosed on just because they are renting out their house. If foreclosure does happen (and believe me I'm going to fight this) how long would I have to wait before I would be eligible to buy another home? I just recently got my credit back in order and now this.
  2. too much

    too much Banned

    You need to get yourself an attorney tomorrow.

    GEORGE Well-Known Member


    (not an expert)
  4. sirrowan

    sirrowan Well-Known Member

    I have an open end mortgage and this is what my mortgage says. I purchased my home through a first time homebuyer's program too.

    5. Occupancy, Preservation, maintenance and Protection of the property; Borrower's Loan Application; Leaseholds.

    In a nutshell, it says that I must occupy the home within 60 days of closing and continue to occupy the Property as my principal residence for at least one year after the date of occupancy.

    9. Grounds for Acceleration of Debt.
    (a)(ii)Borrower defaults by failing, for a period of thirty days, to perform any other obligations contained in this Security Instrument.

    And finally..under NON-UNIFORM COVENANTS:
    17. Assignment of Rents. Borrower unconditionally assigns and transfers to Lender all the rents and revenues of the Property. Borrower authorizes Lender or Lender's agents to collect the rents and revenues and hereby directs each tenant of the Property to pay the rents to Lender or Lender's agents. However, prior to lender's notice to Borrower of Borrower's breach of any covenant or agreement in the Security Instrument, Borrower shall collect and receive all rents and revenues of the Property as trustee for the benefit of Lender and Borrower. this assignment of rents constitutes an absolute assignment and not an assignment for additional security only.

    If Lender gives notice of breach to Borrower: (a) all rents received by Borrower shall be held by Borrower as trustee for benefit of lender only, to be applied to the sums secured by the Security Instrument; (b) Lender shall be entitled to collect and receive all of the rents of the Property; and (c) each tenant of the Property shall pay all rents due and unpaid to Lender or Lender's agent on Lender's written demand to the tenant.

    Borrower has not executed any prior assignment of the rents and has not and will not perform any act that would prevent Lender form exercising its rights under this paragraph 17.

    Lender shall not be required to enter upon, take control of or maintain the Property before or after giving notice of breach to Borrower. However, Lender or a judicially appointed receive may do so at any time there is a brreach. Any application of rents shall not cure or waive any default or invalidate any other right or remedy of Lender. this is assignment of rents of the Property shall terminate when the debt secured by the Security Instrument is paid in full.

    So even though I only have to occupy the home for 1 year and can then rent it out, they can come in at their discretion(sp) and say that I'm in default.

    Is this what they are doing to you?

    Sorry so long.
  5. tiger00

    tiger00 Well-Known Member

    Umm, I'm not a lawyer in any sense of the word, but I read that to mean that you have to occupy the home for at least 1 year as the principle residence. If you decide to rent out the property after a year then the rent that you collect is owed to the lender up to the part that you owe in mortgage i.e. you collect $600 in rent, and owe $400 in mortgage, then the first $400 in rent is the lender's money.

    In addition, if you breach any of the mortgage provisions, the biggest being that you don't pay, then they are allowed to take possession and that's just good old fashion foreclosure.
  6. Hedwig

    Hedwig Well-Known Member

    I think the first thing to do is to read your papers very carefully. You may want to try a consultation with an attorney.

    Many of these programs have conditions that you have to meet or you've forfeited.

    Can you refinance and pay this loan off? You said that originally they denied you to refinance, but what if you tell them the only way you can pay the $58K is to refi the house.

    Also, if you're in a little better shape, can you offer to move back in and avoid the foreclosure?

    GEORGE Well-Known Member



    I have NEVER had anybody ever say they had a "NEVER RE-FI CLAUSE" IN THEIR MORTGAGE...I know about PRE-PAYMENT PENALITIES...BUT NOT A NO "RE-FI"

    GEORGE Well-Known Member

    "NO-RE-FI" would be as good as CITIBANK saying...SORRY, you are not permitted to BT the account to a $0.00 balance (PAY IT IN FULL) MUST make the min payments...FOREVER!!!
  9. Hedwig

    Hedwig Well-Known Member

    GEORGE--the problem here is that it's not a regular mortgage company that is going to foreclose. It's the city. He evidently got some sort of first-time buyer's program with strings attached. A lot of times states or cities do this to help people buy the homes, but they want them to be owner-occupied. That's why he had to get permission to refi, because he would be leaving the program. There was probably some sort of subsidy involved. Either money or lower rate or some sort of incentive.

    VA and FHA require houses to be owner occupied, but I'm not sure how long it's for, not much over a year if that.

    It's the government program that's causing the problem, not a company. At least that's the way it looks to me. And I know that there are programs out there to help people get a home, and the unfortunate thing in some cases is that they do have a lot of conditions attached.
  10. szccdw

    szccdw Active Member

    Hedwig you are correct in everything you said. I spoke to the Director of the program today and she told me that I am obligated to them for $5000 since that is how much they gave me towards my down payment. Once I give them their $5000 I can rent, lease, or do whatever I want with the property. Until then I either have to live in it or give them their money once I am no longer living in it. If I don't give them the $5000 then they foreclose on the entire $58000 balance. I have tried calling every place under the sun today to see about borrowing the money but everyone is saying that yes my credit is ok but since I only work part time they will not be able to help me. I know I can come up with half within 30 days it's now down to the other half which I would not have until Feb that is the problem. I have no family so there's no one to turn to in that area and there is definitly no silver spoon laying in my mouth. This is really crazy to me. I'm not making a cent off of the house just trying to save it until I get back on my feet and it seems like every time I try to pull myself up someone is kicking me back down.
  11. Nestea

    Nestea Well-Known Member

    why dont you go for a no doc program?

    try greenpoint bank.

    the rate may be as high 8% or so...

    but you dont have to tell them how long you work, where, etc.

    or maybe you should just go stated income, with a regualr bank, saying you work full time?
  12. sirrowan

    sirrowan Well-Known Member

    The first thing you need to do is READ EVERY WORD of you mortgage and note and all other papers that you signed at closing.

    Don't go by what they (the city) are telling you verbally.

    If you want, scan your mortgage, with personal identifying info blocked out, post it and let everyone read it. You're bound to get several different interpretations, but it's free and there are so many intelligent and knowledgeable people here who are more than happy to help.

    And also, I know that he's not an attorney, but Fla-tan has a mortgage section at You might want to give him a "holler".

    I would just hate to see these people take your house. I feel for you buddy.

    Whatever you decide, best of luck to you.

  13. Hedwig

    Hedwig Well-Known Member

    Have you talked to the city and see if they'll take half of the $5000 now and the rest in February, or maybe part now and make payments on the rest?

    Have you tried a credit union? They are sometimes easier to work with.

    If you have any equity in the home, have you tried borrowing against that?
  14. szccdw

    szccdw Active Member

    Hedwig I have tried all of the above the you listed. I don't have enought equity and I called the mayors office and my city councilman today about the issue and they said they will have a staff meeting with the people who work for the department I'm dealing with and get back to me within the next week and see if they will allow me to pay half now and the other half in Feb. Wish me luck. I need it.
  15. Hedwig

    Hedwig Well-Known Member

    Good luck. Keep us posted. And keep looking for places to get $5K.

    Do you have a bunch of violations at $1K you could sue for? :)

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