Important Illinois IHDA Question

5 Replies

Hello,

I am new to this forum. Any help you can provide to me will be greatly appreciated. I bought a townhouse in September of 2014 and used an "IHDA" loan. I lived there for 2 years and in October of 2016 I bought a new house and rented out my townhouse. Everything has been going great. However, yesterday I received a letter from my mortgage company, US Bank, stating that they noticed that my mailing address changed and I am violating the terms of the loan by not occupying the townhouse. I used the same mortgage broker to finance both the townhouse and the new house. He did not mention that renting out the town house would violate the terms of the mortgage. Furthermore, he asked how much rent I would collect, reviewed the lease I was going to use, and set me up with n insurance broker to get a landlord policy. Does anyone have experience with this sort of thing? What is the bank going to do when I call and tell them I'm renting it out? I lived there for two years. It's not like I bought the property and rented it out within a couple of weeks. 

Thank you in advance.

Joe

You can't rent out, this program is for primary residence. I don't know which program you use but all the the programs are for PR only. You may have to return back that money which you use under IHDA program but your lender or IHDA can direct you what would be next step. 

IHDA or the "Illinois Housing Development Authority" https://www.ihda.org/ has two programs. One for families to acquire a home and the second for them to move into a rental unit. Since you have moved out you need to go see your lender about re-financing your condo. It is designed to help those in need of a hand up. Since you now own two homes, it sounds like they have accomplished their goal. 

Talk to the folks at U.S. Bank about a refi.  Be honest and tell them you did not know about the limitation and ask for their guidance on correcting the oversight. 

@Joe Ernster sorry to hear you are going through this.  I am very familiar with this program, and we help buyers using it all the time.  That's totally crappy that your LO didn't explain that part to you when you purchased.  Especially then when you went back to him to buy your next home!

The IHDA program requires you to occupy the property for 5 years.  Their down payment assistance is a 5 year forgivable 2nd mortgage, which is forgiven at 1/60th per month for 60 months.

By violating the terms of the Mortgage, you will need to refi before they call the Note due.  Which will require you to pay back some of that 2nd mortgage.  Since you bought Sept 2014, if you got the $7500 DPA, you should only have about $2500 to pay back, as you are already about 40 months into it.

I would accept that reality and take care of it before you have any further problems.  If you don't have enough equity to refi to an investment property mortgage, you will either need to pay down the principal to refi, or worst-case, you may need to sell the home quickly before it's too late.  If they call the Note due, they won't accept monthly payments, and you can really start to screw up your credit.

Let me know if you have any further questions or if I can be of any help.

Thank you all for your replies. If I contact IHDA, and payoff the loan with them, can I simply have them remove their lien and avoid refi?

Also, I have never missed a payment or been late. Wouldn't US bank want to just keep me making payments?

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