Would we default on our home modification loan if we rented the house out?

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Here is the long story short. My wife and I are divorcing. The house, which she owned before we met, has always been under her name and we never changed that. She intends to move back to her family and I am staying in the house with my kids and intend to make the monthly mortgage payment. However, we got some news from our insurance agent that concerns us. he said that since I am not on the title I would be considered a renter. I am ok with that. BUT…they would also need to let Bank of America know that the house went from a home owners policy to a rental insurance policy. Our biggest concern is that my wife went through the home loan modification process last year and got our monthly mortgage payment reduced. If we go to them to let them know what is happening is it possible they might say she is defaulting on the loan by using it as a rental property. Clearly I am going to be a “renter” by name but I suspect BoA really won’t care as long as the mortgage and insurance is paid. So my question is…how likely will it be that BoA has an issue once they receive notice from our insurance company about the change into a rental property insurance policy?

  1. Reply
    April 29, 2011 at 10:45 pm

    Here’s the problem, because you were married to her you still think you have to deal with what’s going on AND YOU DO NOT. As they told you you are merely a renter. The problem is in “her” hands and not yours. I understand that the house was hers before and is hers now, so why are you butting in? Let her solve it the way she wants to. As a renter though you will need a renter’s agreement and if you don’t get one then she can toss you out whenever she wishes. I suspect you will receive some of the furnishings in the divorce so if worse comes to worse for you then call U-haul and get them to send one of those puds or pods over and fill it for storage and then rent with a friend or family till you can get (have the time to look around and make a good choice) a rental of your own. If you two are still talking then ask her what her plans are. I would guess she wants you and the kids to have a place to live so ask her for a rental agreement.

    I had one more thought. Seems to me there needs to be insurance on a home (so she will have to take care of that, is she employed?) (there used to be insurance that covers death, as in if death occurs to the owner then the house is paid off for the children), but there also needs to be renters insurance by you. Also you might want to consider personal flood insurance for what you own in the home.

    these days banks can agree to things and then pull the rug out from under you.

  2. Reply
    April 29, 2011 at 11:34 pm

    BoA will call the loan in full. that is a primary residence mortgage, not a commercial mortgage

  3. Reply
    Kevin Williams
    April 30, 2011 at 12:27 am

    You are not a renter. Insurance agents are paid when they write policies. Inform the agent you will be cancelling the policy. If the policy was paid in full also request a refund for the balance of the policy. Immediately have your wife request a new insurance policy and include all persons who will be living in the property. At this moment you are both legally married and still have those rights. You should not be required to secure a new policy. If the agent was really concern with helping he could have simply added your name to the policy.

  4. Reply
    Beverly S
    April 30, 2011 at 1:21 am

    It totally depends on paperwork signed. She needs to call BOA. Just because a home is originally owner occupied does not mean she can’t rent it out. But the terms of the modification may say she can’t.

  5. Reply
    Doctor Deth
    April 30, 2011 at 1:38 am

    MAJOR problems – mainly for her since HER name is on the mortgage, but SHE is not staying in the house

    why would SHE leave a house that has owned since before you were married? – that makes no sense

    you can be put on the title without being put on the mortgage to satisfy the insurance company

    does she realize if YOU miss a payment or are late HER credit history is going to be affected?

    and yes – the bank could call the loan due by her leaving and “renting it”

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