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How would a lender find out if a homeowner rented out their reverse mortgaged home

by Goingnutz from Dana Point, California. Jan 4th 2013 Reply


Bert Carpenter (BertCarpenter)
#38 ranked lender in Arizona - 1,821 contributions

Well, First of all, Don't. It's called Fraud and the Feds are looking for people to hang up there as examples. Here are some of the methods I have seen: When you move out, you no longer need homeowner's insurance, why? Because it covers all of your personal belongings that are oops, no longer there. The insurance company notifies the lender of the change in coverage, Busted. So you don't tell the insurance company, right? Still Busted but now you have committed insurance fraud as well. So you decide it's still worth the risk and don't change the coverage type, but your tenant takes out a renter's policy. Still busted and still fraud because the feds will know in very short order that the policy has been issued to a tenant at your address. They send you a letter and the post office notifies them of the mail forwarding ordered in place, Busted. They see a change in the address on your payment check, Busted. They'll even send people out to knock on the door and see who answers, Busted. They verify the address on your tax return or SS paperwork, your Medicare info. You need to remember that the loan is insured by FHA/HUD, which IS the Federal Government. One of the forms you signed allows them to obtain the kind of info discussed above as long as the loan is outstanding. There are probably at least a dozen other ways they will find out, and trust me...They will find out. My advice is this...Unless you want to become the next Jessie James Poster Child for Mortgage Fraud, Don't screw with the Feds. The loan agreement requires you to live in the home as your primary residence or to pay it off. Live in it or pay the loan off. Of course you could always take up residency at the local Federal Pen. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ Licensed in California and Arizona ~ NMLS 40586 ~ www.LoansA2z.com ~ 888-889-9950

Jan 4th 2013
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J.D. Peck (MortgageColoradoSprings)
#45 ranked lender in Colorado - 77 contributions

I agree with Bert. If you find yourself asking a question that begins with "how would a lender find out", you're likely doing something that would subject you to very large fines and/or imprisonment.

Jan 5th 2013
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,875 contributions

The #1 white collar crime currently on the FBI radar is mortgage fraud.

Jan 5th 2013
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Scott Williamson (scottwmson)
#304 ranked lender in California - 9 contributions

It is not illegal to rent your home, if you read the reverse mortgage note you will see that contractually you must maintain the property as your primary residence. Therefore renting the property out would trigger lender to call the note due and payable. This will create a problem, especially if you have equity left. If the reverse mortgage is a federally insured loan then that would involve them. Do you have to live there all the time? Can you move family members in? Can the family members contribute to the mortgagees fanicials? There are ways that you can benefit without violating your agreement (the note). The biggest problem I see with reverse mortgages is the mortgagess/family do not think about the exit strategies before they move forward or for that matter after they have one. Feel free to call me with any questions. Bottom line is make sure you know what you are doing and DO NOT DO ANYTHING ILLEGAL AND DON'T DO ANYTHING CONTRARY TO YOUR NOTE.Scott WilliamsonSacramento Mortgage Inc.scottpwmson@gmail.com916-261-0499

Jan 5th 2013
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Dave Metsker (DaveMetsker)
#37 ranked lender in Oregon - 2,317 contributions

Most lenders send an annual re-qualification letter, where you indicate that the home is still your primary residence. Also, returned monthly mail statements are a clue.

Mar 19th 2014
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