WORD: Inability to Rent Property

And the WORD for Today Is...

Inability to Rent Property – may trigger the default on a mortgage. It should first be pointed out that most mortgages DO NOT allow for the renting of a property (home) if it was acquired to be owner-occupied. To leave the house and move elsewhere constitutes abandonment. In a situation where such a borrower has been forced to relocate in order to remain employed, then a lender may consider allowing an exception hoping the borrower can rent the property for enough to cover the mortgage. When this is not possible then you have a default caused by the inability to rent the property. Likewise, if it is an investment property and the owner cannot rent it at all due to market or property conditions, then the inability to rent may lead to default and ultimately to foreclosure. See “default trigger event”.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

You can find more helpful definitions of WORDS like these in Your Real Estate Advisor which can be purchased at www.DovePublishingHouse.com.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

WORD: Abandonment

The WORD for Today Is:

Abandonment–means you have voluntarily left the mortgaged property. If the borrower assumes another housing payment, say rent, they are demonstrating the ability to continue making house payments, even if the amount would have been reduced. Loss mitigation rights are nullified by abandonment. While a lender may CHOOSE to still work with you; they are not OBLIGATED to do so even on government loans. See default trigger event.

Refers to the voluntary relinquishing of ownership rights by failure to use the property. Abandonment usually requires two things:
a. failure to use the property (not being physically present for an extended period of time).
b. coupled with the intent to give up your interest in the property (the actual removal of your possessions from the property which would signify you have no further interest).

It is important to understand what constitutes abandonment because a borrower’s rights could be on the line. A lender has the right to aggressively move forward with foreclosure action under the “abandonment clause” in most mortgage notes. As an author/trainer I travel extensively and may be away from my residence for 2-3 weeks at a time (do not use the property). That does not constitute abandonment since my belongings are still in place and look as though someone plans to return eventually. Therefore, there is no intent to give up my interest in the home just because I am away for an extended period of time. A borrower who removes most or all of their possessions from their home while in default is usually guilty of abandonment and should expect foreclosure action to follow.

© Copyright 2008, Home Ownership Matters, LLC. All Rights Reserved.

You can find more helpful definitions of WORDS like these in Your Real Estate Advisor which can be purchased at www.DovePublishingHouse.com

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)