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Need to rent the home, Wells Fargo wants me to go through their process, no guarantee of approval, what shoild I do

CA, Wells Fargo Owner-occupied, refinanced less than a year ago, had been in the property several years before the refinancing. Currently moving, want to rent the place, Wells Fargo wants me to go through their process in order to rent (yes I contacted them and they sent me a letter outlining their process). Most people have said -including a real estate attorney- that technically it's a problem, in reality the bank won't care as long as you make the payments and will most likely never find out that it's being rented.But... in order to rent I have to change the policy -which is sent to the bank. According to my insurance guy this is something that I can't get out of. What the bank actually sees is a bunch of codes + descriptions so I could be somewhat discreet by keeping my current policy and just adding a line item for renters... but this will cost me more than just a straight renters policy which is more likely to raise a flag. Plus, for a property manager, they want to be listed as an insured party, something I think will definitely raise a flag. I've considered supplementing my owners policy with a renters policy, but the consensus seems to be that this could lead to insurance fraud and/or a denial by one of the companies due to the 50/50 payout. I could of course go through their process but what if it's denied; I'm still moving and need the income from the rent. I could also try to get the load modified to non owner-occupied but what if the rate costs me more per month than I can get in rent. Ideas? by joffer from Beverly Hills, California. Jan 4th 2013 Reply


William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,727 contributions

So long as your intent when you refinanced was to live in the property, then sending a letter to your lender explaining your scenario should be all that is necessary. Following Wells Fargo's process should not mandate that you refinance again as an investor... you definitely don't want to hide it from the lender or your insurance company.. Since penalties for loan fraud are pretty severe... so it sounds like you're going about it the right way.. update your insurance, and follow Well's process, and you should be ok... I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Jan 4th 2013
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Bert Carpenter (BertCarpenter)
#1 ranked lender in Arizona - 1,908 contributions

Joffer, Please give me a call to discuss. There is a lot of gray area and I'd be happy to walk you through the situation based on facts. It would be much simpler, and much more accurate to have a conversation rather than having us try to guide you by trying to read between the lines. An example of a gray area that can lead to mis-information or bad advice is when you say you refinanced less than a year ago. Although technically everyone is right when they say you agreed to at least one year (per the residency affidavit you signed with the loan documents) and moving out now would be a form of fraud. However, in a conversation, I can clarify the information. The answer as to fraud / intent is different if the refi was last week vs. last March. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ Licensed in California and Arizona ~ www.LoansA2z.com ~ 888-889-9950

Jan 4th 2013
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Andrew Alfonso (CashCow)
#43 ranked lender in Florida - 271 contributions

Be careful not to let them scare you. Remember - they are basically trained lawyers and banks want to lend money to the people who dont need the loan. Bottom line is this --- as long as YOU make sure there payments are received without fail - You will never hear from them. And remember................ You dont want too..........Good Luck -- Andrew

Jan 4th 2013
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Steven Ceceri (CreativeFinancingOptionsGroup)
#36 ranked lender in Massachusetts - 723 contributions

The issue you have to review is your mortgage covenants (mortgage and note) to determine if there is any language in those documents as to what your obligations are if you decide to no longer occupy your property, so my advice is that you do take a look to see what you can find out. With regards to insurance, yes, you would be best suited to make sure your insurance company is aware that you no longer occupy the property as you will need to have the proper coverage in place to ensure that any type of loss will be covered. If you rent the house out, it is also advised to make sure your tenants carry a renter's policy as well. You can speak to your Real Estate Attorney about reviewing your Mortgage & Note and to an Insurance Professional on your Insurance Coverages.

Jan 4th 2013
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Larry Gray (lgray_312_247)
#595 ranked lender in California - 1,139 contributions

Obviously, your issue seems more complicated than it ought to be by your long explanation of the situation.In my experience in similar scenarios , making it clear in a letter of explanation that you have to move to a new primary homeand need to rent the current home to meet your financial obligations, ought to work. It seems you are willing to undergo a refinance as a non-owner occupied property if necessary. I do not think it will be, based on your situation (have to move.) If you werepurchasing a new home to live in not very many miles from your current property then it would be of more concern.

Jan 4th 2013
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