Q. I recently bought a new home. When I applied for my mortgage the lender made me sign a statement that I intend to occupy the house. However, I am now having second thoughts about the neighborhood. A friend has offered to rent the house from me. If I don't move into the house could I be in trouble with the lender?
A. Yes. When you signed that loan-application statement saying you intend to move into the house, the lender gave you the interest rate for owner-occupied residences. This is usually the best available rate because such mortgages have the lowest default rates. If you fail to occupy the home, you defrauded the lender.
To prevent possible problems, I suggest you move into the house and try living there for at least a few months. The lender can't force you to remain there forever, especially if you don't feel comfortable in the neighborhood. But at least you won't have to worry about the lender checking up on you, as lenders often do, and learning you never moved into the house.
Q. I have never seen my problem discussed in your excellent column and hope you can help. Several years ago we sold our home, let the buyer take over our FHA mortgage, and we took back a second mortgage (which we have since sold). Our real-estate agent failed to warn us we should get a release of liability from the lender. Neither did the agent suggest we check the buyer's credit which, we now know, is very bad. The buyer is several months behind on the monthly payments, but the FHA lender reports these late payments on OUR credit report. Is there anything we can do about this?
A. Your situation shows why sellers of homes with assumable mortgages, especially FHA and VA loans, should insist their buyer assume the loan so the seller can be released of further liability.
If you still owned that second mortgage you could declare the first mortgage in default, pay the missing payments, and then foreclose on your second mortgage. However, since you no longer have any connection with the home the best you can do is write to the lender asking not to have the late payments reported on your credit reports. But you are legally still liable for those payments so the lender might refuse to cooperate.
(Copyright 1990, Tribune Media Services Inc.)
Bob Bruss' column appears Sundays in the Home/Real Estate section of The Times. Letters and comments should be sent to Bob Bruss, Seattle Times Newsroom, P.O. Box 70, Seattle, WA 98111.
Copyright (c) 1990 Seattle Times Company, All Rights Reserved.
