Crunch Time On I.O.R.R

Well I received the annual notice from the bank requesting my asset vs. liability statement, 2023 W-2, copy of lease for former rental property (now primary residence) by July 5th, 2024 per “federal banking regulations”.

Irks me to no end, as far as I’m concerned I signed for a 30 year mortgage @ 4.75 % paying a .75% add on because the bank was more “at risk” being a rental property (outmoded thinking).

I emailed them last fall when I wasn’t sure if my then tenant was going to renew and they said I would have to tear up that mortgage and get a new one at the prevailing rates. I bought it with the thought of moving in at some point (just a bit sooner than I wanted) I moved in it in March.

This bank is a small local community bank, which I generally like but I know of no one who mortgages rental property who does this.

Funny thing, I have a secondary checking account there that I use for small debits and such, the ATM is right out of the 1990’s lol.

The current rate for a 30 year fixed is 6.875 % fixed no points, my mortgage is relatively small (around 85K) my calculations are the payment would go up about 60 bucks a month plus whatever junk fees they would hit me with and add 6 and a half years to the length.

Was trying to think of best option, one is email them and say it’s “not currently rented” can you give me to the end of the year ? thinking that rates may go down a bit ? My income can more than handle it if I say it’s vacant.

Request a “waiver” of the usual junk fees being it’s in house and bank is less at risk ?

Do nothing (not send what they requested) my only fear is they could call the loan ?

Anyone have any last ditch ideas ?

First, I would ask them to show me the banking regulation that requires a new mortgage must be drawn up. Without that, they really have no standing to require you to apply for a new loan. Next, Consult with a real estate lawyer.

1 Like

He very likely signed a contract which has Ts & Cs stating the purpose for the loan and an agreement that the note can be recalled if those conditions change.

Contract law applies to most real property mortgages.

I looked over the documents, I do not see anything about having to change the terms but there are some things that are vague. (to me)

Yes, I’ve had to provide this nonsense about this time of year since 2018 (I bought autumn 2017). Didn’t think much of it other than being a nuisance.
Also I bought with tenant in place.

I do have a HELOC on it that I opened in 2021 or 2022, had to give all the usual application info, come to think of it late last year I got notice that they didn’t get the IORR 2022 info, one of the loan people said that when I opened the HELOC with the info that it would suffice, the notice said if I didn’t send the 2022 IORR info I “might not be able borrow from them in the future” I had to clarify to them late last that the loan guy said the HELOC application info was ok for IORR. They confirmed it was ok.

I could pay off with Roth, I was born during the JFK administration so I’m not going to lose decades of growth but It’s something I don’t want to do.

I could refi to a 15 year but don’t want the higher payment. Plus the rate would still be considerably higher than my 4.75 %.

I thought it was just a regular mortgage when I got it albeit a rental. in retrospect I probably could have got away with not telling them originally that it was a rental. But I’m an honest guy.

What irks me:
I paid extra for the last 6 plus years (.75%) being a rental (thousands).
Property isn’t changing ownership.
Bank is at less risk.
Payment going up 60 bucks or so a month.
They will hit me with new refi fees (a couple thousand).
Adding 6 plus years to the length of the loan.

I’m going over to the lending office tomorrow and give them W’2, financial statement (asset vs. liabilities) pay stubs and tell them “it’s not currently rented” …I’ll let the chips fall where they may.

Was wondering if they “call” the mortgage how does that work ?

Do they give notice and I take it from there ?

Do they attempt to sell the property from under my feet ?

So I went over to the lending office.

Brought my w’2, financial statement and told them it’s not “currently rented”.

The guy (loan officer) said that was ok, when I find a renter submit a lease copy, I asked if I’m ok for the rest of the year if I don’t “find one” ? he said that would be ok, what worries me is that it was just a verbal and when this info “gets upstairs” they may press the issue.

I would have to do a full re fi, I would have to re buy title insurance and pay the scammy junk fees, would total about 2,500.00 or so.

I sarcastically said to him so the bank would be less at risk, I’d have to pay 2,500.00 or so up front, my payment would go up about 60 bucks a month and I’d add 6 1/2 to 7 years to the loan, after already paying thousands in extra interest I’ve already paid since the inception of the loan because it was a rental ? he scratched his head and said “unfortunately yes”.

The original intent of the loan was to provide financing for a rental property. If the terms of that agreement state that if that status changes then you must refinance or pay off the loan you are contractually bound to do so. I suggest you read your contract and act accordingly.