You shouldn't be allowed to rent out a house if it has a mortgage on it. It's not your house to rent out!
Discussion
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But legally the property does belong to the mortgage holder
Until the mortgage is paid off, the bank holds the deed and title to the house, not you.
But legally you control the property even tho there is a lien against it. You are the owner of the property, the bank is the owner of the debt.
Not exactly. Yes you legally control the property. But ownership means holding the title to the house. This is held with the bank. When the mortgage is paid off you can request it and they will mail it to you or you pick it up from a bank branch. This is what home ownership is. This is what I think should be required to rent a house. People get mortgages for houses they cant afford and pay it off with another families earnings. It is disgusting and should NOT be allowed. My opinion.
I do agree lending standards could be improved.
You are correct that your equity ownership is subordinate to the lien holder's. Yet legally you control it and your name is listed on the title. 🤷♂️
I know all this. Paperwork needs to show your name otherwise you wouldnt even be allowed to do renovations or work on your property. Your name is on the title. But the physical title is your ownership and the bank physically has it. Like imagine if a company held your marriage licensed documents and youre legally not allowed to have them unless you pay it off. Oof.
Respectfully, you don't need the physical title in hand to be considered the legitimate owner. It is not a bearer asset. If you lose your paper title, you don't lose equity ownership.
I didnt mean to argue about this. I really just wanted to comment that I think you have accurately identified a legitimate problem in some local housing markets, and while I agree some solution is needed, I dont think that a broad ban on renting indebted houses would solve more problems than it would create.
There would be no homes to rent in this case.
This would create change all over the housing industry and it would be better for it. More affordable homes so people wouldn't HAVE to rent. It would be more of a choice. We wont need rental units if there are barely any renters. The banks have caused this mess with the govs approval. We didnt always lend out money. This trend is only getting worse.
That’s a pretty complex hypothesis. I understand what you are saying but there would still need to be places for ppl with low income/ bad credit/ short term homes.
In the end would result in large entities owning those properties and likely turning into a larger monopolies.
I do not agree with banks selling pools of mortgages and using the end real estate as collateral.