Posted on: 04th Feb, 2009 05:42 pm
i'm hoping someone can help me with this question: after a mortgage has closed and been funded, can the bank require the borrower to sign a rider it did not ask for at closing?
here's my situation...
i closed on a refinance of my home early last week. everything went fine, and as of last friday, the old loan was paid off and the new loan was funded. the bank even gave me a check for about $10k, as i took out some equity in the refinance.
now, a bit of background: the home we just refinanced is the only home we own. however, we spend part of the year in another city, and we rent an apartment in that other city, because that's where we earn our income. our living and earning situation was disclosed to the bank during our loan application process.
yesterday, the title company that oversaw the closing (and represented the bank) got back to us. they said the bank is requiring that we come in and sign a second home rider. although the loan documents we signed at closing all say that we were refinancing our primary residence, the bank has now decided that it's a second home. the rider they want us to sign restricts the use of our house and forbids us from ever renting it.
this seems ridiculous and illegal. let alone whether the bank is right to call our house a second home (and i believe they are wrong), how can they change the terms of the loan after the loan has closed and been funded? should we simply refuse to sign the rider? what can the bank do to us?
here's my situation...
i closed on a refinance of my home early last week. everything went fine, and as of last friday, the old loan was paid off and the new loan was funded. the bank even gave me a check for about $10k, as i took out some equity in the refinance.
now, a bit of background: the home we just refinanced is the only home we own. however, we spend part of the year in another city, and we rent an apartment in that other city, because that's where we earn our income. our living and earning situation was disclosed to the bank during our loan application process.
yesterday, the title company that oversaw the closing (and represented the bank) got back to us. they said the bank is requiring that we come in and sign a second home rider. although the loan documents we signed at closing all say that we were refinancing our primary residence, the bank has now decided that it's a second home. the rider they want us to sign restricts the use of our house and forbids us from ever renting it.
this seems ridiculous and illegal. let alone whether the bank is right to call our house a second home (and i believe they are wrong), how can they change the terms of the loan after the loan has closed and been funded? should we simply refuse to sign the rider? what can the bank do to us?
My first inclination is to say don't sign it. However, I would consult an attorney who can actually read everything that you already signed. The reality of the situation is that your primary residence is where you spend most of your time. My guess that is where you work and not in the place you just refinanced. The lender wants to be sure this is not an investment property.
We can not give legal advice.
However, we can tell you what will probably happen.
You probably have two choices:
1. Provide documentation to the lender that this is your primary home and that there is no need for the second home rider. The fact that the lender is even offering this must mean the property is in a reort or vacation area.
2. Sign the second home rider or they will call the loan due in full which means you will either have to refinance to get rid of that loan or they will start the foreclosure process.
There are documents and disclosurs you sign which state that if there are any corrections that need to be made after closing, you agree to make them.
I am sure there are many borrowers in the world who signed second home disclosures and while they are not supposed to rent, they do and probabaly never get "caught" because as long as the mortgage is never late, no one ever calls them and no one ever knows.
If you did the mortgage with the intent of renting it but you presenetd it as a primary or second home to get preferable rates lower than investor properties, that is fraudulent on your part.
If you did the mortgage as a first or second home in good faith and after a year decided to rent it, no one would ever say anything.
If you rent it tomorrow, it smacks of being fraudulent to get the lower rates.
However, we can tell you what will probably happen.
You probably have two choices:
1. Provide documentation to the lender that this is your primary home and that there is no need for the second home rider. The fact that the lender is even offering this must mean the property is in a reort or vacation area.
2. Sign the second home rider or they will call the loan due in full which means you will either have to refinance to get rid of that loan or they will start the foreclosure process.
There are documents and disclosurs you sign which state that if there are any corrections that need to be made after closing, you agree to make them.
I am sure there are many borrowers in the world who signed second home disclosures and while they are not supposed to rent, they do and probabaly never get "caught" because as long as the mortgage is never late, no one ever calls them and no one ever knows.
If you did the mortgage with the intent of renting it but you presenetd it as a primary or second home to get preferable rates lower than investor properties, that is fraudulent on your part.
If you did the mortgage as a first or second home in good faith and after a year decided to rent it, no one would ever say anything.
If you rent it tomorrow, it smacks of being fraudulent to get the lower rates.
Hmmm¦. Im sure youre pure as the driven snow but consider the lenders surprise when actually looking at the credit report. As you explain it I dont see this as a . I would not make a federal case out of it. Sign; its not going to cost you anything and the is just touching bases.
Sixty days AFTER closing, PNC Mortgage sent me "Loan Security Agreement" to sign. Basically, it strips me of my legal rights. For example, it says that if I am 30 days late with mortgage payment, I agree to vacate property immediately, that they can put the property up for sale after 7 days, and that I can't take out a 2nd on the property. If I don't sign in 30 days, they will forclose without notifying me and I must vacate immediatley. I put down 40%, have a credit score over 800, and have no additional debt. I am a senior citizen. Any advice?
Hi Sasha,
A similar query has been replied to in the given page: http://www.mortgagefit.com/postdeal/about57225.html . Please take a look at it. I hope it will help you.
A similar query has been replied to in the given page: http://www.mortgagefit.com/postdeal/about57225.html . Please take a look at it. I hope it will help you.