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Renting a house before short sale closure
ThornMartin
Registered User regular
Registered User regular
So, my wife and I are trying to buy a short sale. There are two liens on the house -- the primary lender has approved the short sale, but we're waiting on the secondary lender.
We're hoping to be able to close by the end of the month, but the secondary lender is taking their time. Our agent is calling them daily to try to speed up the process, but she's been unsuccessful so far.
Currently, my wife and I are staying in a hotel. My company is paying for us to stay in the hotel until the 19th, at which point we'll be paying for the hotel room ourselves.
The seller has offered to rent us the house until we close, which would definitely be cheaper than the hotel (and more tolerable -- we're sharing the hotel room with 3 cats and a dog).
Is renting the house before the short sale closure a good idea?
Could renting the house affect the short sale at all? Would the lenders care that it's being rented?
If I go through with renting the house, is there anything that I should make sure is written into the lease?
I don't want to move into the house, then have the deal refused and have the seller foreclose -- thereby resulting in us having to move out. I'm fairly sure the probability of that is low -- the secondary lender is owed less than $8000.
We're hoping to be able to close by the end of the month, but the secondary lender is taking their time. Our agent is calling them daily to try to speed up the process, but she's been unsuccessful so far.
Currently, my wife and I are staying in a hotel. My company is paying for us to stay in the hotel until the 19th, at which point we'll be paying for the hotel room ourselves.
The seller has offered to rent us the house until we close, which would definitely be cheaper than the hotel (and more tolerable -- we're sharing the hotel room with 3 cats and a dog).
Is renting the house before the short sale closure a good idea?
Could renting the house affect the short sale at all? Would the lenders care that it's being rented?
If I go through with renting the house, is there anything that I should make sure is written into the lease?
I don't want to move into the house, then have the deal refused and have the seller foreclose -- thereby resulting in us having to move out. I'm fairly sure the probability of that is low -- the secondary lender is owed less than $8000.
ThornMartin on
0
Posts
Answers:
NO
Possibly and possibly.
Yes.
It isn't a good idea. After the deal is approved by both lenders, some sort of money/negotiation to move in immediately is possible, but you should consult someone on the specifics for a contract for that, because of damage/liability.
The house once rented is not a primary residence for the seller anymore, which can make a difference. The banks would also likely ask what is going on if they figured this out, and that would add further delays to the process.
Lastly, how is "The probability of that is low"? The secondary lender loses 100%, so why should they easily agree? This is why short sales are a massive pain with multiple lenders, because the junior loans can easily kill an agreement if they think there is a chance for a non-zero return at some point. And holding out or threatening to kill the deal potentially nets a concession from the first lender to get the property off the books.
Some additional details:
The house hasn't been the owner's primary residence for a while now. In fact, it was previously rented just a few months ago.
The second lender is not losing everything with the short sale. The primary lender is giving them $1000, and the owner is signing a promissory note to pay off the rest of the $8000.