Financing in Minneapolis>Question Details

Brutus, Home Buyer in Minneapolis, MN

Under FHA's owner-occupied guideline, how does the FHA verify that the property has been occupied by the owner within 60 days? And do they

Asked by Brutus, Minneapolis, MN Thu Jul 22, 2010

continue to check after the 60 days?

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14
Are you planning on not living in the home after obtaining an FHA loan? You will sign an owner occupancy agreement and lender fraud could carry jail time. Many lenders are now using an outside verification service to see that a home is really owner occupied. The verification can be as simple as the mailing address for your tax bill, water bill, home owners insurance policy. Also your insurance policy will change coverage if you move and rent the property. They may even conduct a drive buy verification. This form of lender fraud is being watched by HUD and the Inspector Generals Office very closely as it has been a big issue.
1 vote Thank Flag Link Thu Jul 22, 2010
I did a lease purchase but I signed a purchase and sale agreement , It was signed in jan. 2012 with a closing date of Feb 2014 Seller has a THDA rider where he has to occupy the townhome, which I was unaware of until they called his loan due and threatened to foreclose, I tried to get a loan but due to a prior foreclosure, I was sent a denial stating I was not poised to get a loan until Jan 2015 which is 3 yrs from the date my foreclosed home was sold. I (buyer) have tried to get a release from the lease purchase but seller says he will sue. I feel like the seller broke his THDA rider and I also had a financial contingency . Can he sue me
0 votes Thank Flag Link Mon May 20, 2013
If you really are moving into the property, they you shouldn't have an issue. Technically the contract is a picture in time, at closing you are intending to occupy the property, if a time delay in getting the home ready pushes it beyond 60 days it is unlikely you would have any issues.

If however you are not really moving in and using the FHA low down payment to finance what is really going to be an investment property, that is considered fraud.
0 votes Thank Flag Link Thu Jan 24, 2013
I love how everyone here is so noble that they had to repeat what the last opinion said. LOL. If you have nothing new to add, keep it to your self please.
0 votes Thank Flag Link Wed Jan 23, 2013
Not an issue you would want to be deceptive on; especially since the fines can be up to $10,000.
0 votes Thank Flag Link Sat Jan 22, 2011
Not an issue you would want to be deceptive on; especially since the fines can be up to $10,000.
0 votes Thank Flag Link Sat Jan 22, 2011
Contact http://www.hud.gov for a specific question llke this. No one will want to give any "opinions on this that would be outside of the FHA/Hud guidelines, but it sounds like you may just have a timing issues. More importantly, congrats on your new purchase!


Scott Hutchinson
Edina Realty
scotthutchinson@edinarealty.com
http://www.scotthutchinson.edinarealty.com
C: 612 396-06920
0 votes Thank Flag Link Mon Jul 26, 2010
Brutus, I think that the reason you received the responses that you did are because we are so used to people who try to trick the system. If there is a reasonable explanation of why you have delayed, such as because you are doing work on the house, that is one thing. If you are moving to the area, which I had at one time, it would probably not even pass underwriting. I had to do it for the person as a second home. Even on non-FHA loans now there are occupancy documents that need to be signed at closing.
0 votes Thank Flag Link Sat Jul 24, 2010
Thanks Jeff and Peter. The question was raised merely because of the timing of when we could move in.
0 votes Thank Flag Link Sat Jul 24, 2010
Although lenders have been known to check up on owner occupancy in post closing audits, it is a very small percentage of files that end up subject to such active scrutiny as investigation of a borrowers owner occupancy within the required 60 day window. Most of those audits are performed more passively, such as with post closing fraud databases that can see if a client opens a new account more than 60 days after closing with a home address other than the subject property. The lion’s share of borrowers are simply on the honor system.

Now lenders will definitely step up the investigation level if the mortgage goes into early payment default because that allows the lender to shorten the foreclosure process dramatically, if they can prove borrower fraud.

So if you make your payments on time but it ends up taking 70 days before you actually move in to the property, it’s very unlikely that they will become aware of the delay, and less likely that you would be subject to penalties or acceleration of the mortgage repayment.

FHA is intended for owner occupancy. If intent is fraudulent, beware that anyone can submit an anonymous report of an incidence to the HUD Inspector General : http://portal.hud.gov/portal/page/portal/HUD/program_offices/oig

The HUD Inspector General has the right to inspect owner occupancy.

Peter Boyle -612 701 6816
0 votes Thank Flag Link Fri Jul 23, 2010
I think we are all in agreement in thinking that you are planning on something that sounds a bit fraudulent. I wouldn't put anything past banks any more, they can look into anything. Many lenders will now use Lexis/Nexis to investigate borrowers, or google them, so they can do the same thing after closing as well. They could always have someone who checks to see if you have a phone number listed at your address 60 days after closing, and the look into it if they don't find anything.
0 votes Thank Flag Link Thu Jul 22, 2010
Yes! When you register your homestead, they can check and if you change your address the lender will report.
0 votes Thank Flag Link Thu Jul 22, 2010
This is not something to be taken lightly. If you get an owner occupied loan, you need to live in the home.
0 votes Thank Flag Link Thu Jul 22, 2010
It is unlikely that they would check unless something triggered an investigation. However, violating your agreement with them would be fraud and carry serious implications.

Hopefully no one is thinking of this.

Steele
0 votes Thank Flag Link Thu Jul 22, 2010
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