Buy and Bail refers to the addition whole of home buyers providing misleading information about the rental revenue of their current home which they plan to vacate. Any way in many cases, the true intent is not to turn the asset into a rental. What we are looking more and more is that these buyers plainly abandon their previous property, stop manufacture their payments, and plainly let it go into foreclosure. Although not every person who is vacating one asset for other has the intention to abandon their previous home, those who do have caused Fha, Fannie Mae, and Freddie Mac to take steps in order to prevent this fraudulent activity.
The following requirements must now be met when a borrower is converting their customary house into an venture property.
Fha
-Must be able to qualify with both mortgage payments unless they meet one of the following
-The borrower is relocating with a new or existing employer
-The borrower has a loan-to-value (Ltv) ratio of 75% or less
-Must be able to document an executed lease business agreement of 1 year or more and must supply evidence of a protection deposit and/or first month's rent.
Fannie Mae/Freddie Mac
-Must be able to qualify with both mortgage payments unless the borrower has a Ltv ratio of 70%
-If 30% equity exists, 75% of the rental revenue may be used to offset the mortgage payment.
-Rental revenue must be documented with a copy of the fully executed lease agreement
-Receipt of a protection deposit from tenant and deposit into the borrower's catalogue must be documented.
-Reserves of six months Piti for both properties is required.
Source of information:
Platinum 1st Mortgage Lp
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