I live in a 24 unit condominium in Chicago. Our declaration specifies no renting. During this past year, our board took a survey with the hope of changing that clause. When they did not get the results they wanted, they allowed an owner to rent (and denied they new anything about it). This owner went ahead and bought a house knowing they could not rent. Then the president quit after he was confronted. After some research it was discovered that he also bought and closed on a house. Now he moved out and told us that he is turning over the condo to the bank. Why are banks giving mortgages to people who currently own property when the likely hood is that they can’t afford both. Would they not check his outstanding mortgage, the current value of the condo, whether he could rent or not? Is it possible that he lied on his new mortgage application? This seems to be an easy way out, since he bought at the highest time in 2006, probably put very little down (since they we giving out mortgages like candy). Not only that, another owner said he will do the same thing in a couple of years since he is also in that situation. (Needless to say they are all from the me-generation.) Is this the latest trend? This could be devastating for the condo market. They have their new house, and they don’t care if their credit rating is ruined for 3 years since they won’t need credit.
SAVAGE SAYS:It is my experience that it is very tough to get a mortgage these days — and the one on their exisiting condo should certainly have raised a flag with the lender. You probably don’t want to get involved, but if you knew (from public records)which bank granted the mortgage on the new home (available through a title lien search) then you might want to contact regulators to see how it happened that they left your association with a foreclosure, but were granted a new mortgage! If there was fraudulent information on the application, not only will the bank be in trouble, but the borrower will face jail time for bank fraud! And when and if that happens, you can post the article on your bulletin board –as I’m sure will other condo associations!