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Old 03-15-2011, 12:03 PM
205 posts, read 249,000 times
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Not sure if anyone has encountered this before. Depending on where and what type of mortgage you get you need to state whether it is for investment or a second home. This applies all the time for foreign nationals. Does anybody know the consequence if you buy a home as a second home but rent it out after? Is there any consequence and how often they audit this? Thanks
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Old 03-15-2011, 02:12 PM
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ALL FNMA/FHMLC/VA/FHA loans require you to state whether the home will be owner occupied, a second home, or an investment property.

There are different rate and downpayment structures for different types of loans.

The mortgage companies DO audit. When you close, you'll sign an IRS document that allows them to pull your taxes at any time during the loan. If you are filing rom a different address, you're busted. They'll send a letter that can't be forwarded to see if it's returned, check with the tax collector to see where the tax bill is sent. Even have an investigator drive by or knock on the door to see who is living there. I have a friend who does this for mortgage companies, they persue it very aggressively if they get an inkling of fraud--and that's what it is, fraud if you sign the documents fully intending to use it for a different purpose than you state.

Now obviously, if you live in the house for 10 years, then decide to move elsewhere and rent it, they don't really care. But outright fraud from orgination? They can actually persue you criminally, and will almost always call the note.
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