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Frank Living…, Home Owner in 60640

Is it Loan Fraud to rent recently refinanced FHA property due to job relocation?

Asked by Frank Livingston, 60640 Thu Apr 7, 2011

We have owned a home under a FHA loan for 4.5 years. We are at the final stages of refinancing the home and my work has just informed me that I could be relocating to another office out of state in the next 2 months. If we rent the property out, do these circumstances make us vunerable to FHA loan fraud? We do not want to sell the house because we, like so many are upside down in the house.

I have read that an FHA loan will not penalize the owner if they have lived in the home for one year. Does this one year start over if we refinance the home through FHA?

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Frank,

Withholding this information from your new lender IS cosidered mortgage fraud since you have not closed on the loan. Whether or not you may get into trouble is a different story. I doubt anything will happen to you as long as you do not default on the loan. As soon as you default on the payments is when the auditing/investigating will begin.

My wife is a CFE (Certified Fraud Examiner) and an IL licensed Private Investigator who has worked many cases of loan fraud over the years. If you would like to speak to a true expert on this topic, feel free to email me and I'll have my wife contact you.

Good luck,
Mike.
mcline@waterstonemortgage.com
2 votes Thank Flag Link Fri Apr 8, 2011
Hello, Frank;

Both answers below are very good, and both have really good advice. I would tell you that in my expierence F.H.A. would understand a job transfer. They may want a document showing the transfer request came after you started the refinance, but I really wouldn't worry about it. Things happen and as tough as mortgage servicers can be, I really can't see them getting to worked up over a job transfer. It's always good to call your servicer or loan company for a final answer, but it they said it would be an issue I would really be suprised.
1 vote Thank Flag Link Fri Apr 8, 2011
Hi Frank, I am not a loan officer, nor am I an attorney, but have assisted buyers with FHA loans for nearly 20 years. I would imagine that if you prove that your job transfer was not effective until after you closed on your refi, that there was no fraud involved. I would suggest that you speak with the lender who actually approved your FHA Refi loan to get their take on the issue. If I may be of any assistance with the rental or ultimate sale of your home, please do not hesitate to contact me at 773.865.3327 or deborahhess@conlonrealestate.com.
Web Reference: http://www.deborahhess.com
1 vote Thank Flag Link Fri Apr 8, 2011
Technically the one year starts over. Had the refinance been completed before you were given the word of the job transfer then you should have been OK. Knowing of the transfer and withholding that could be considered fraud. The optimal word here is "could be" not will be. At this point let your conscience be your guide and error on the side of caution.
1 vote Thank Flag Link Thu Apr 7, 2011
All the below answers are great. But the complicating factor is they you found this out before you actually closed on your new loan. So you might want to run this by your attorney, just to be safe.
0 votes Thank Flag Link Fri Apr 8, 2011
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