1-4 Family Rider
I was reviewing my closing docs on a new rental purchase and the lender added the 1-4 family rider. The rider states that the section covering the right to reinstate after defualt is removed. I objected to this and am waiting to hear back from the lender.
Is this deletion standard for investment properties? Why is deletion even necessary? Can the lender truly deny me the right to reinstate after a default? Does this mean if I make a minor infraction like insurance lapse or a late fee or something, the lender could invoke this section and force me into foreclosure?
Apart from the fact that I do not want to give any rights I am entitled to, another reason I am worried is that the loan amount is less than 30% of the appraised value and a lender might decide it is in their better interest to foreclose and re-sell the property once the market improves.
Thoughts?
JS.
ITB,
Thanks for the response. Obviously I do not plan to default, but my question is why is it necessary to give up this rioght which has been mandated by Federal regulations.
Is this a standard deletion of rights approved by the Feds just becuase it is an investment property? I am trying to understand why this "right" is up for grabs. I thoutght the 1-4 family rider was more for assignemnet of rents.
I understand that most banks will not want to own real estate but I also heard that a number of banks in the 80s were using any possible demand features built into their mortgages to force higher interest rates when the rates went up. Once the market comes back, what is to stop them from refusing to reinstate if insurance coverage was not sent to them or if the tenant runs afoul of the HOA or if I dispute a late fee or if ........ So many possibilities.
JS.
In CA state law says 1-4, MUST be abe to reinstate up until 5 days prior to the 1st trustee sale
I say in CA that would be against public policy (or what every the term is..