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Old 07-22-2010, 08:15 AM
 
706 posts, read 1,110,300 times
Reputation: 91
Default what are Fannie Mae rules on owner - occupant bank owned homes is regard to length of residency and fines?

This document was presented to me and I question some of the content. I've been in touch with an agent for over a year and 90 days or 6 months was always the time frame for re-selling a home bought with a mortgage as primnary resident, etc. They mention "intent" when unexpected personal events could enter the picture. Then they mention a fine of $5000 and a retention of earnest money.
My earnest money was to be applied toward the cash purchase so "what" earnest money might they mean? I am trying to buy two dwellings, one for primary residence and possibly one for a rental property. The dwelling referred to below is the primary residence and I have no "intent"-ion of selling.
I was told yesterday that an investor is ready to buy this home at the asking price when the 15 day lockout period ends on July 28th, however they counter offered to me instead, at a lower price. If they have an investor ready, then why lower counter to me? This is a Fannie Mae owned home and I know they prefer owner occupants but we are dealing with the mighty dollar here. They can get $2900 more next Wednesday.

Please read this agreement below and give me your professional opinions, and I have no way to know if it is a standard agreement, or it has been created for this particular deal. I've never heard of any 12 month wait, or a $5000 fine, or a retention of earnest money.
OWNER OCCUPANT CERTIFICATION
Rider to the Real Estate Purchase Addendum
REO# _____________
Property Address ______________________________________
This is to certify that consistent with the representation made in Section 4 Use of Property of the Real Estate Purchase Addendum, I intend to occupy, establish and use the above referenced property as my primary residence. I further certify that I am not purchasing this property with the intent to sell or rent it within twelve (12) months of occupancy. Furthermore, I fully understand that the sale of this property to me by Fannie Mae is conditioned upon my representation of being an owner occupant of the property.
In the event I falsely represent any statement in this certification, I shall pay Five Thousand Dollars ($5,000) to Seller as liquidated damages, which amount shall be in addition to Sellers right to retain any earnest money deposit and any liquidated damages held or covered by the Seller pursuant to Section 19 of the Real Estate Purchase Addendum or any other remedy available to Seller at law or equity.
____________________________________ ____________________
PURCHASER Date

Last edited by naeem5; 07-22-2010 at 08:41 AM.. Reason: error in one of the numbers.
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Old 07-22-2010, 08:33 AM
 
3,524 posts, read 4,518,979 times
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If they discover you're an investor and non-owner occupant before the sale closes, they'll keep your earnest money & pay them $5K plus damages.

You've mentioned in previous posts that you were upset when investors swooped in before you could make an offer - now you're in the position that investors cannot offer for 15 days and owner occupants have the upper hand.

Not quite sure why you're making a big deal about this. Either you intend to occupy the residence or you don't.
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Old 08-02-2010, 11:16 PM
 
1 posts, read 25,417 times
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What if it's a 2nd home / vacation home? Is that included in the legal definition of occupied?
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Old 08-03-2010, 11:09 AM
 
706 posts, read 1,110,300 times
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Quote:
Originally Posted by mdhamps View Post
What if it's a 2nd home / vacation home? Is that included in the legal definition of occupied?
As far as home owner's insurance a 2nd home/vacation home is included.
I was paying expenses at two dwellings and I remember the insurance guy say that if the 2nd place was not so close to the other one, then it might be able to be insured as a 2nd home. This 2 dwelling expenses, lasted for about 3 months and the primary residence was sold.

As far as loans I'm not sure.

My agent says if there is a "personal reason" why I need to move (sell) in the 1st twelve months, the bank won't enforce their $5000 fine because at that point in time, it would be clear that I was not an investor from day one.
I signed the above document.
However, someone said that real "investors" only have certain restrictions for only 90 days.
And Fannie Mae prefers owner occupants and that is why investors are shut out for 15 days. The fact that I was paying cash, made me look more like an investor to the bank.

We have 3 opinions from 3 lenders on FHA loans being used for investment property and two of the ones I've looked at are Fannie Mae owned. So, 2 of these lenders may be wrong.
One Bank of America lender said he had seen FHA loan on investments but had never seen any "close". Why write them if they won't close?
Another Bank of America lender said that FHA does indeed do FHA loans on investment property.
And a Wells Fargo lender knows my intention is to purchase an investment property and the loan is there. I've rather abandoned my search, but the FHA loan is there.
I've heard there are different rules in different places. If the unit is 2 units and I live in one of the units, and rent the other out, that might not be investment.
Now, I'm talking about low priced units, waaaay under $50,000.
I'm no investor with deep pockets looking for multiple units looking for FHA loans.
Someone said FHA is not for rich persons, it's for people who have trouble getting a loan. Well, the buyers of my house had an FHA loan, and the wife "by herself" did all the financing based only on her credit report and job, so you know she had a good job and was not low income. And she was approved for the asking price of $175,000 and she had another 20% in cash, so are FHA loans intended for such high income individuals?
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Old 11-01-2010, 01:58 PM
 
1 posts, read 24,634 times
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well it is clear u r trying to buy the second home for investment... u are not allowed to do so as per Fannie Mae rules... the repurcussions for stating a false statement are mentioned.

From moral perspective this should shut u out. If u do not want to worry about morals - then I am not sure how legally binding this clause is. They talk about "intent" ... and that is subject to change if the personal situation changes... Moreover Fannie Mae would hush out most investors on moral grounds - and I dont think they have time to look into how many and for what purpose everyone is buying properties.

But u never know ... so stay out of trouble if u can.
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Old 11-01-2010, 03:08 PM
 
5,221 posts, read 5,305,971 times
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Quote:
Originally Posted by SamQur View Post
well it is clear u r trying to buy the second home for investment... u are not allowed to do so as per Fannie Mae rules... the repurcussions for stating a false statement are mentioned.

From moral perspective this should shut u out. If u do not want to worry about morals - then I am not sure how legally binding this clause is. They talk about "intent" ... and that is subject to change if the personal situation changes... Moreover Fannie Mae would hush out most investors on moral grounds - and I dont think they have time to look into how many and for what purpose everyone is buying properties.

But u never know ... so stay out of trouble if u can.
I signed a document saying I would-could not sell for at least 12 months.
"Bank" document.....
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Old 11-28-2010, 08:15 PM
 
1 posts, read 24,266 times
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What if a home is being bought by parents for their adult child & her family? Is that considered investor or owner-occupied?

Last edited by Unsure_of_requirements; 11-28-2010 at 08:15 PM.. Reason: Fixed '?'
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Old 11-29-2010, 06:04 AM
 
Location: MID ATLANTIC
3,911 posts, read 8,245,269 times
Reputation: 2901
Quote:
Originally Posted by Unsure_of_requirements View Post
What if a home is being bought by parents for their adult child & her family? Is that considered investor or owner-occupied?
How is the property treated on tax returns?
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Old 11-29-2010, 06:09 AM
 
Location: MID ATLANTIC
3,911 posts, read 8,245,269 times
Reputation: 2901
I'm getting dizzy reading the OP's post, but if I understand it correctly, he is trying to buy 2 units as owner occupied. If the units are one deed, as in a 2-4 unit dwelling, there are provisions for this, with both, Fannie and FHA. If they are two distinct properties, it's mortgage fraud to buy two properties at the same time as owner occupied, and you could be subject to more consequences than what is listed in the contract. Fortunately (for you), there are far bigger fish to fry.
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Old 11-29-2010, 07:31 AM
 
5,221 posts, read 5,305,971 times
Reputation: 1735
Quote:
Originally Posted by Unsure_of_requirements View Post
What if a home is being bought by parents for their adult child & her family? Is that considered investor or owner-occupied?
I did not offer on the 2nd home because the price was too high, and the seller took it off the market.
The house I live in, was bought from Fannie Mae. I signed a form saying I could not rent it or sell it for 12 months.

You'll need to ask your real estate agent.
I paid cash for mine so it could have appeared to be investment.

If you are going to pay cash, or let your adult child or family member arrange their own financing (and you just give them the money to make the payments) I'd guess that is nothing close to you, or they, being classified as an investor.
You didn't say if the family member can get their own mortgage, or you were co-signing their mortgage, or you paying cash. Cash "looks" like investor. It did for me but they had a standard document for me to sign that I would not sell-rent for 12 months.

A long time friend and Bank of America mortgage officer, told me you can get a mortgage on an investment property, so I trust their statement.
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