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Old 04-11-2012, 05:23 AM
 
63 posts, read 113,419 times
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Question What does "owner occupied" ACTUALLY MEAN????

We're looking to buy an REO in a different State... most of them are with fannie mae or freddie and they basically try to force you to occupy the property within 2 months of closing but they don't even outline what occupy even MEANS.... they just say it needs to be "owner occupied"... and cannot be sold / rented for 12 months after buying.

We sold our place here over 3 years ago and have been renting and now looking to move out of State into one of those bank owned places buying it with cash.

So does anyone know exactly what the hell "ower occupied" actually means? and if they don't define exactly what it means then how can they even enforce it?

If we purchase the property , go out there , sit in it for 24 hours.. turn on a utility.. then leave for a 6 month vacation or still have a rental place in another State......... Is it owner occupied ?????????

Our agent said it's a grey area.. she doesn't even know.

How can anyone force you to stay in a property you own ? That has to be illegal or even unconstitutional.
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Old 04-11-2012, 09:12 AM
Status: "Back on the sunny side of the street!" (set 18 days ago)
 
Location: Richardson, TX
6,562 posts, read 9,914,794 times
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What are you talking about? Are you talking about the "first look" period where they will only take offers from owner occupant applicants for the first 15 days?

HomePath.com - Special Offers and Incentives

Investors can and do buy REO's all the time.
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Old 04-11-2012, 10:57 AM
 
Location: Austin
4,317 posts, read 7,926,712 times
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If you are trying to buy the property when it is brand new on the market, you must LIVE in the property. Fannie and Freddie, and other banks do not "allow" investors to buy their properties until after a specified time frame as they want people who plan to live in the properties to have first choice. Owner occupied means it's your primary residence. It means you don't call any other place "home". Do you need further explanation than that?
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Old 04-11-2012, 12:25 PM
 
Location: Miami, FL
25 posts, read 71,583 times
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Quote:
Originally Posted by FalconheadWest View Post
If you are trying to buy the property when it is brand new on the market, you must LIVE in the property. Fannie and Freddie, and other banks do not "allow" investors to buy their properties until after a specified time frame as they want people who plan to live in the properties to have first choice. Owner occupied means it's your primary residence. It means you don't call any other place "home". Do you need further explanation than that?
This is the common interpretation.

However, many jurisdictions have their own interpretations of how to do the "sniff test" of owner occupancy that deviate from this.

For example, Fannie Mae when they decide if you are "owner occupy" for their REO Homepath homes is whether you own a home at the time you submit the offer to them. Everyone else is considered an investor. Even though you own a home today and have a closing scheduled in 1 week to sell but if you put in an offer today and you own as of today you are NOT qualified for owner occupancy. If you own a home now and have it on the market to sell in order to buy a different home to live in, you do not qualify for owner occupancy. Even though you are going to live in it, their sniff tests disqualify you.

So their "owner occupancy" is really FIRST TIME OR FREE AND CLEAR HOME BUYER INTENDING TO USE AS PRIMARY RESIDENCE.

Others have different sniff tests. Find out what their sniff tests are in the forms or addendums then you can be in a better position to know what their interpretation is.
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Old 04-11-2012, 01:33 PM
 
Location: Austin
4,317 posts, read 7,926,712 times
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Quote:
Originally Posted by Miamicuse View Post
This is the common interpretation.

However, many jurisdictions have their own interpretations of how to do the "sniff test" of owner occupancy that deviate from this.

For example, Fannie Mae when they decide if you are "owner occupy" for their REO Homepath homes is whether you own a home at the time you submit the offer to them. Everyone else is considered an investor. Even though you own a home today and have a closing scheduled in 1 week to sell but if you put in an offer today and you own as of today you are NOT qualified for owner occupancy. If you own a home now and have it on the market to sell in order to buy a different home to live in, you do not qualify for owner occupancy. Even though you are going to live in it, their sniff tests disqualify you.

So their "owner occupancy" is really FIRST TIME OR FREE AND CLEAR HOME BUYER INTENDING TO USE AS PRIMARY RESIDENCE.

Others have different sniff tests. Find out what their sniff tests are in the forms or addendums then you can be in a better position to know what their interpretation is.
I have never heard of this, and I've been doing this almost 12 years. If you tend to be living in the house within the time frame they tell you, either 60-90 days, it is a primary residence, and thus owner occupied. If the buyer is obtaining financing, it would be a primary residence loan, not an investor loan. Not sure where you got your information, but I've certainly sold Fannie and Freddie homes to people who already own homes and they are owner occupied.
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Old 04-11-2012, 02:49 PM
 
3,318 posts, read 7,233,212 times
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Quote:
Originally Posted by anonguy View Post
We're looking to buy an REO in a different State... most of them are with fannie mae or freddie and they basically try to force you to occupy the property within 2 months of closing but they don't even outline what occupy even MEANS.... they just say it needs to be "owner occupied"... and cannot be sold / rented for 12 months after buying.

We sold our place here over 3 years ago and have been renting and now looking to move out of State into one of those bank owned places buying it with cash.

So does anyone know exactly what the hell "ower occupied" actually means? and if they don't define exactly what it means then how can they even enforce it?

If we purchase the property , go out there , sit in it for 24 hours.. turn on a utility.. then leave for a 6 month vacation or still have a rental place in another State......... Is it owner occupied ?????????

Our agent said it's a grey area.. she doesn't even know.

How can anyone force you to stay in a property you own ? That has to be illegal or even unconstitutional.
What is so difficult about it? Are you going to live in the property? If so, it's owner occupied. Are you going to buy it and either rent it out or flip it? If so, it is not owner occupied. Pretty much anyone who has to ask or comes up with odd scenarios like yours is trying to skirt the system (i.e. mortgage fraud).
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Old 04-11-2012, 03:07 PM
 
Location: Salem, OR
10,850 posts, read 18,116,894 times
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Quote:
Originally Posted by Miamicuse View Post
This is the common interpretation.

However, many jurisdictions have their own interpretations of how to do the "sniff test" of owner occupancy that deviate from this.

For example, Fannie Mae when they decide if you are "owner occupy" for their REO Homepath homes is whether you own a home at the time you submit the offer to them. Everyone else is considered an investor. Even though you own a home today and have a closing scheduled in 1 week to sell but if you put in an offer today and you own as of today you are NOT qualified for owner occupancy. If you own a home now and have it on the market to sell in order to buy a different home to live in, you do not qualify for owner occupancy. Even though you are going to live in it, their sniff tests disqualify you.

So their "owner occupancy" is really FIRST TIME OR FREE AND CLEAR HOME BUYER INTENDING TO USE AS PRIMARY RESIDENCE.

Others have different sniff tests. Find out what their sniff tests are in the forms or addendums then you can be in a better position to know what their interpretation is.

This isn't a sniff test issue. No banks will accept an offer contingent on the successful close of another property. If you qualify for two mortgages then you typically just have to submit a lease for the first property showing that you intend to convert it into an investment property.
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Old 04-11-2012, 03:29 PM
 
Location: Boise, ID
5,361 posts, read 10,235,040 times
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Quote:
Originally Posted by anonguy View Post

How can anyone force you to stay in a property you own ? That has to be illegal or even unconstitutional.
They can't force you to live in a property you own. However, if they are the lender, they can either refuse to loan you money to buy the house initially, or give you different terms on the loan, or call the loan if you fail to live in the house, or if they are the seller, they can refuse to consider an offer from you if you aren't going to live in the house.

But I agree there is some grey area in it. Whether it means "I intend to live in the house as my primary residence and live in it more than 6 months of the year", or it means "I do not intend to put a renter into the house and if I'm not living there, it will be vacant" is really the only valid distinction, and it may depend on who is asking the question and for what purpose.
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Old 04-11-2012, 04:29 PM
 
Location: Southern New Hampshire
4,234 posts, read 3,937,886 times
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Quote:
Originally Posted by anonguy View Post
How can anyone force you to stay in a property you own ? That has to be illegal or even unconstitutional.
Others have given the OP good answers, but I just wanted to add my two cents' worth to one thing ... unconstitutional? Really? Exactly which part of the Constitution would be violated?

"My landlord won't let me have a cat. That's unconstitutional!"

"My teacher won't give me an A without working. That's unconstitutional!"

"My boss won't let me say the f-word to him without firing me. That's unconstitutional!"

OP, please take this post in the facetious spirit in which it is intended. :-)
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Old 04-13-2012, 04:29 AM
 
63 posts, read 113,419 times
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Quote:
Originally Posted by TimtheGuy View Post
What is so difficult about it? Are you going to live in the property? If so, it's owner occupied. Are you going to buy it and either rent it out or flip it? If so, it is not owner occupied. Pretty much anyone who has to ask or comes up with odd scenarios like yours is trying to skirt the system (i.e. mortgage fraud).
We don't need a mortgage. So it's not possible to commit mortgage fraud.

How is it an odd scenario? Why would it seem odd that someone can't move into a property in a different State immediately?

We have a lease that doesn't run out until the end of the year here.. and also my grandmother has dementia and we are her primary caregivers. She'll be going into a nursing home here this year but the paperwork for it needs to be complete before a move. We need a property waiting for us to move into before the lease is done.

Yes we plan on living in the property but it would be vacant for a certain period of time after closing.

Freddie mac only asks in a short Q&A sheet if it will be owner occupied.. they don't list any kind of penalty or timetable to occupy.. at least not in the docs we have.

Fannie mae says the property needs to be owner occupied within 2 months after closing.. or $10,000 fine. But they don't actually define anywhere what owner occupied means.

Last edited by anonguy; 04-13-2012 at 04:47 AM..
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