Buy and Bail
Buy and Bail refers to the increasing number of homebuyers providing misleading information about the rental income of their current home which they plan to vacate. However in many cases, the true intent is not to turn the property into a rental. What we are seeing more and more is that these buyers simply abandon their former property, stop making their payments, and simply let it go into foreclosure. Although not everyone who is vacating one property for another has the intention to abandon their previous home, those who do have caused FHA, Fannie Mae, and Freddie Mac to take steps in order to prevent this fraudulent activity.
The following requirements must now be met when a borrower is converting their primary residence into an investment property.
FHA
-Must be able to qualify with both mortgage payments unless they meet one of the following
-The borrower is relocating with a new or existing employer
-The borrower has a loan-to-value (LTV) ratio of 75% or less
-Must be able to document an executed lease agreement of 1 year or more and must provide evidence of a security deposit and/or first month’s rent.
Fannie Mae/Freddie Mac
-Must be able to qualify with both mortgage payments unless the borrower has a LTV ratio of 70%
-If 30% equity exists, 75% of the rental income may be used to offset the mortgage payment.
-Rental Income must be documented with a copy of the fully executed lease agreement
-Receipt of a security deposit from tenant and deposit into the borrower’s account must be documented.
-Reserves of six months PITI for both properties is required.
Source of information:
Platinum 1st Mortgage LPShould you have any questions or need further information, please don’t hesitate to contact me,
(775) 220-1630
Or visit my blog at www.SellingNorthernNV.com
Joshua Talayka
Chase International
Office: 775 850 5900
Toll Free: 877 922 5900
Cell: 775 220 1630
Fax: 775 850 5901
985 Damonte Ranch Pkwy, Ste. 110
Reno, Nevada (NV) 89521
I have a 1st mortgage of 255k, and a 2nd of 75k. If we sold our home today, we might break even. We have never had a 30 day late on our 1st or 2nd mtg. We did, however, experience some financial hardship due to the loss of my job and it took 18 months for me to find full time work again. This drove up our credit card debt and hurt our credit. We are currently not delinquent on anything, but have had a few 30 day lates on credit cards, and have 1 collection acct for $125, which we are fighting. Our HE has matured, and now the bank won’t refi due to past delinquent credit cards. What will happen now? Will they foreclose?
Loved the information here I’ll have this bookmarked and will be back to read more.