I am a week from closing and a problem came up.

The property I am purchasing is a single family home but it has since been vacated by the owner who is out of town and has an existing tenant with a signed one year lease till Jan 2007. Our contract has an existing tenant addendum and we have to honor the lease.

My intent is to close on the house, then approach the tenant to vacate sooner, may be offering some incentives to him. I also heard from the owner after we had a signed contract, that he has approached the owner to see if he can buy the property.

Now suddenly my lender called and said underwriting is putting the process on hold, because the appraisal came back and it mentioned the property has a tenant. They said if it has a tenant then it is an investment loan and not a residential loan even though the intent is to make this our primary residence. An investment loan the rate is much higher and have to reapply which will blow the closing date out of the water. Furthermore the owner may entertain the tenant's offer if we ask for an extension. How can I be charged a 30 year loan based for "investment" if the intent is to reside in it?

Now the lender says I need to provide a letter to him signed by the tenant to say he will vacate within 60 days for the loan to move forward. First, the tenant had a baby yesterday and they are still at the hospital, not a good time to go in and tell them they need to move, second there is no motivation for them to sign such a thing, especially if they want the property themselves.

My realtor says this is just for the loan and that I should make up such a letter and sign it myself...but it is illegal. The property is in Florida if it makes a difference.

Any idea how to solve this predicament?

PF

Apply for 1 year ARM investment loan.
Refinance as owner occupied once you move in.
Hopefully your lender can turn around this application faster, since lots of the work has already been done.

that sounds like what i would do..

Either that or sell the current tenant into signing a letter stating that they are vacating on the date of close (or X number of days afterwards if the lender will give you the leniance).

I would find a new house, they are a dime a dozen.

My realtor says this is just for the loan and that I should make up such a letter and sign it myself...but it is illegal. The property is in Florida if it makes a difference.


The lender is absolutely correct. Your realtor should be fired if you don't go through with this deal. First he/she puts you in the predicament of not pointing out the tenant issue on the contract when you want to occupy this home. Then tells you to commit mortgage fraud by making up a letter and signing someone elses name. That realtor should be reported to FREC for the latter violation and at best should be sent on their way for not protecting your interest. Is this realtor representing the seller as well, if so, it shows why there should be more than one realtor in the transaction in most cases.