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  1. #1
    Join Date
    Aug 2014
    Posts
    6

    Default Renting a Property With a Mortgage That Requires Owner Occupancy

    My question involves real estate located in the State of: Maryland
    I have recently purchased a condo, putting 20% down, and using conventional mortgage to finance it as my primary residence. When applying for a mortgage, I intended to live here for at least several years. I lived in the property since the day after closing date. Job offer too good to throw away from out-of-state came along, requiring me to relocate. I am not ready to sell yet, but I would like to rent it out. More then 7 month elapsed since purchase, but less 1 year.
    The promissory note contains the following language:
    Borrower shall occupy and use the Property as Borrower's principal residence within 60 days after execution of this Security Instrument and shall continue to occupy the Property as Borrower's principal residence for at least one year after the date of occupancy, unless Lender otherwise agrees in writing, which consent shall not be unreasonably withheld, or unless extenuating circumstances exist ...
    The loan has been sold twice since then and is owned by Fannie Mae now.

    Please, confirm my understanding of the above document:
    1. If I am to rent it out now, I have to obtain the written consent of the Lender. Is it correct? How hard is it to get such consent? How do I start? Do I start with the loan servicing company first?
    2. If I wait for the next ~4 month, I will pass the one year threshold. Will I be safe to rent then, without the Lender's consent. Am I correct?
    3. Job change is not an extenuating circumstance. Am I correct?

    Any general advice/comment on the situation will be appreciated as well.

  2. #2
    Join Date
    Oct 2006
    Posts
    16,474

    Default Re: Conventional Mortgage: Rent a Condo Before 1 Year of Owner Occupancy: Obstacles

    Quote Quoting mzu2006
    View Post
    My question involves real estate located in the State of: Maryland
    I have recently purchased a condo, putting 20% down, and using conventional mortgage to finance it as my primary residence. When applying for a mortgage, I intended to live here for at least several years. I lived in the property since the day after closing date. Job offer too good to throw away from out-of-state came along, requiring me to relocate. I am not ready to sell yet, but I would like to rent it out. More then 7 month elapsed since purchase, but less 1 year.
    The promissory note contains the following language:


    The loan has been sold twice since then and is owned by Fannie Mae now.

    Please, confirm my understanding of the above document:
    1. If I am to rent it out now, I have to obtain the written consent of the Lender. Is it correct? How hard is it to get such consent? How do I start? Do I start with the loan servicing company first?
    2. If I wait for the next ~4 month, I will pass the one year threshold. Will I be safe to rent then, without the Lender's consent. Am I correct?
    3. Job change is not an extenuating circumstance. Am I correct?

    Any general advice/comment on the situation will be appreciated as well.
    Lenders put those clauses into contracts to prevent people from buying property as if they intend to be an owner occupant, when in reality they are really buying the property for investment/rental purposes only. You bought the property intending to live there and its just a quirk of life that you must now relocate. You would be hard pressed to even figure out what person in what department you needed to get permission from, and I can guarantee that the people at Fannie Mae would have an equally hard time finding out who as well...

    However, if you are really going to do it you REALLY need to have a management company handling the rental because otherwise you are not going to be able to do it long distance. It just won't work.

  3. #3
    Join Date
    Sep 2010
    Posts
    19,901

    Default Re: Conventional Mortgage: Rent a Condo Before 1 Year of Owner Occupancy: Obstacles

    Fanny Mae doesn't care as long as you didn't get the mortgage with the intent to lease it (and this isn't a multifamily that you are one of the occupying tenants).

    Most mortgages however do include consent to let provisions. You'll have to read your mortgage documents. There's no magic "it's OK after a year" time limit unless such is specified in the mortgage. You are correct. Job change doesn't allow you out of your contractual requirements.

    On a positive note, consent to let is usually pretty automatic. As long as you are in good standing and it is clear you didn't obtain the mortgage with no intent no reside in it, they usually approve it. I've gotten it twice.

  4. #4
    Join Date
    Aug 2014
    Posts
    6

    Default Re: Conventional Mortgage: Rent a Condo Before 1 Year of Owner Occupancy: Obstacles

    Thanks for the reply,
    the word "consent" does not appear anywhere else on the mortgage/closing documents in the sense of "consent to let", except in the quoted passage. The quoted passage, speaks about a year.
    1. Am I OK after a year has passed since the occupancy date?
    2. Are there any other names for "consent to let"?

  5. #5
    Join Date
    Oct 2016
    Posts
    4,301

    Default Re: Conventional Mortgage: Rent a Condo Before 1 Year of Owner Occupancy: Obstacles

    1. It is if what you wrote is what was actual promissory note.
    2. Many.

  6. #6
    Join Date
    Aug 2014
    Posts
    6

    Default Re: Conventional Mortgage: Rent a Condo Before 1 Year of Owner Occupancy: Obstacles

    Thanks for the reply. Can you name some of the other names for the "consent to let".

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