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Marco Mallard, Real Estate Pro in Evergreen Park, IL

Are there any restrictions to a first time buyer/owner occupant flipping a HUD home, Freddie Mac, or Fannie Mae home?

Asked by Marco Mallard, Evergreen Park, IL Fri Nov 15, 2013

I looked, but couldn't find any statutes or references with direct answers. If anyone can point me in the direction of a website reference that spells these specifics out, I would REALLY appreciate it. He's thinking like this on his FIRST purchase and trusts my advice. I foresee a potentially profitable long term relationship.

Help the community by answering this question:


Depends on the financing product used with purchasing the property.

Feel free to contact me with any questions there may be on this.

Chris Diamond
Diamond Residential Mortgage Corporation
NMLS 771882
0 votes Thank Flag Link Thu Nov 21, 2013
These sellers require owner occupant buyers to sign a occupancy certification stating the legth of time buyer must live in the property. There will be penalties and restrictions for flipping houses.

To invest and flip these homes, you must wait until they accept investor offers and not utilize any owner occupant financing programs.

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0 votes Thank Flag Link Tue Nov 19, 2013
I have seen many deed restrictions for 90 days.
0 votes Thank Flag Link Mon Nov 18, 2013
Once you buy it, it is yours to sell. Some lenders want to see at least 6 months of ownership for the new buyer. For mortgage help, call or email for a free pre-approval in less than 10 minutes. We lend our own money and are licensed in 49 states.

We can do: FHA, Conventional, USDA, VA, HARP, Interest Only, Home Equity, Fixed, and Variable. Find out which product is right for you by calling Brad at (855) 415-5626.

Brad Neumann
Sr. Loan Officer
Crosscountry Mortgage Inc.
Toll Free: (855) 415-5626 ext. 5734
NMLS# 948036
0 votes Thank Flag Link Fri Nov 15, 2013
Yes, you can only buy during the investment period.

From there, check and see if the bank has any restrictions. I have seen some that make you hold it for 3-12months.
0 votes Thank Flag Link Fri Nov 15, 2013
There is a clause in the mortgage regarding how long he must retain title and live in the home and it is tied to the interest rate he receives because he promised the lender it was going to be an owner occupied property. So, generally he must live in the house for at least a year if he is using an FHA loan for the purchase. Playing games with that is fraud, and the current climate regarding that subject is not very promising, so if you value your client don’t let him stick his neck in that noose. If he buys it and gets an owner occupied mortgage using an FHA loan he needs to follow up on his promise to the feds. Good luck,

Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
I answer questions about financing real estate based on my decades of experience dealing with mortgage underwriters. This answer is my personal opinion, has not been reviewed or approved by the company I work for. I do not offer legal or tax advice, if you need answers from an attorney or CPA find one knowledgeable in your local market.
Web Reference:
0 votes Thank Flag Link Fri Nov 15, 2013
Hello yes there are restrictions on HUD owner occupant properties. You my not flip an owner occupant home. You must live in the property for a year. If you have to purchase the property as an investor. There are no restrictions IF purchased as an investor.
0 votes Thank Flag Link Fri Nov 15, 2013
yes - there are several. You must only buy during the investor period - can not say you are an owner occupant. Also, most fannie and freddie products require you can not flip the deed until after 90 days. And the biggy, is if it is an fha loan, it will require two appraisals on sale. But MOST OF ALL people should not invest in homes unless they have a good captial reserve, good plans and great advice if they do not know the market. I know people who try to invest on a shoestring and then lose all their profits because of problems or unforseen circumstances which require them to carry the house. Budget and carrying costs should be thought of very carefully. I recommend caution.
0 votes Thank Flag Link Fri Nov 15, 2013
You have to sign an affidavit stating that you intend to live in the home and will not sell for 6 months or some period of time. It is in the purchase addendum they send you after contract acceptance.
0 votes Thank Flag Link Fri Nov 15, 2013
I would call their 800 number and talk to several people to get the correct answer. Always ask for a supervisor.
0 votes Thank Flag Link Fri Nov 15, 2013
Marco.... when your client purchased a home as an owner occupant, he signed a document stating that he's intentions are to live there, not flip it. He also signed another document stating how much penalty he will occur. All 3 institutions add deed restrictions to investor purchases. From my experience... for owner occupants, you need to live there for minimum 12 month. Not only that, you also had to sign the same document stating that to your best knowledge you know that your buyer is buying a home to live there. I would contact an attorney with your question and would never advise a client to purchase a home to flip it as owner occupant. There's too much liability for one commission check...
0 votes Thank Flag Link Fri Nov 15, 2013
Typically HUD, Freddie Mac and Fannie Mae have a contract addendum for Owner Occupants that specifies that the owner occupant must occupy the home for a minimum of 1 year. Each government entity contract addendum covers this requirement.
0 votes Thank Flag Link Fri Nov 15, 2013

Usually in the HUD disclosures, there is a deed restriction that the deed can not be transferred for a certain amount of time. The mandate of HUD is to support home ownership.

Best regards,

Ivan Sagel
0 votes Thank Flag Link Fri Nov 15, 2013
They almost always have deed restrictions and if so, it will be spelled out in the contract Addendum they always provide. If the buyer is getting a loan then the lender might also have issues with doing it.
0 votes Thank Flag Link Fri Nov 15, 2013
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