Question Details

torrybeaven, Home Buyer in Emerald Isle, NC

We are buying a fannie mae foreclosure and have a question about the owner occupancy clause.

Asked by torrybeaven, Emerald Isle, NC Tue Feb 7, 2012

We will be living in the home, but my husband is not being transferred to the area (active duty military) until 90 days after we are to close on our home. We will not be renting or selling it, so does it matter that we aren't supposed to move to the area for greater than the 60 days? My children and I can always go ahead of him, if we need to, but obviously we'd rather wait for him. Thanks for any insight you may have.

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Torry,
I'm doing one of the HomePath financing deals right now. It's a great program and makes sense to pursue if you find the right home.
The language states in the Owner Occupant Certification states, "I will occupy, establish and use the above-referenced property as my primary residence within 60 days after the Closing and will continue to occupy the property as my primary residence for at least one year after the date of occupancy..."
I call this a legal question because if you vary from what you agree to, there may be consequences you can discuss with an attorney. What constitutes "occupy?" Can you move some furnishings in, spend an occasional night until you fully move in or must you be in full time residence before day 61? I don't know and if I thought I did wouldn't want to exceed my licensing limitations.
I think that since you indicate it may be 90 days before you move in, it may be wise to get a legal opinion as to what you might be able to do and not suffer consequences. Your other option is to sign it, do what you can and hope nobody checks. I can't advise this, but I take you at your word you won't be renting it out.
If your agent or lender can ask a real estate attorney to address this for you it might be a good idea.
0 votes Thank Flag Link Tue Feb 7, 2012
Fannie Mae defines a principal residence as: "A principal residence is a property that the borrower occupies as his or her primary residence." That is the only definition given.

Fannie Mae selling Guide B2-3-01, Occupancy Type Requirements page 238: https://www.efanniemae.com/sf/guides/ssg/sg/pdf/sel013112.pdf
0 votes Thank Flag Link Tue Feb 7, 2012
It is Fannie Mae's financing and it requires us to sign the owner occupancy paper. I just wasn't sure what the technical definition of primary residence is. If we have to physically be on the property, then we'll have to leave the hubby here. ;) If we just can't rent it out or own another property, that suits us just fine.
0 votes Thank Flag Link Tue Feb 7, 2012
Torry,

I cannot find anything in the guidelines that state a required time frame for occupancy, however if you are being asked to sign an occupancy clause that states 60 days, I don't know how you can get around that.

What type of financing are you using?
0 votes Thank Flag Link Tue Feb 7, 2012
I know that FHA requires that the property be occupied within 60 days of closing:

See 4155.1 4.B.2.b: "FHA security instruments require a borrower to establish bona fide occupancy
in a home as the borrower’s principal residence within 60 days of signing the
security instrument, with continued occupancy for at least one year."

However, I do not know of any such Fannie Mae guideline. I disagree with Dan that this is a legal question, it's a question of Fannie Mae guideline as there are no laws involved with this.

I'll take a look through the Fannie Selling guide to make sure but I don't believe Fannie specifies any required amount of time for you to actually take possession.
0 votes Thank Flag Link Tue Feb 7, 2012
I don't think they are likely to hold you to living there everyday at the start - - that's my guess, not a legal opinion. Why not establish it as your legal residence right after the closing? Then being away at the start would be more akin to taking a vacation as far as they are concerned.
0 votes Thank Flag Link Tue Feb 7, 2012
Yes, we will be the only ones living there, just not in the first 60 days if we wait for my husband. Until then, the property will be vacant. Thank you for your input.
0 votes Thank Flag Link Tue Feb 7, 2012
Torrybeaven,
First, this is a legal question that should be reviewed and considered by an attorney’s opinion before you accept any opinions here. My perspective is that your stated intention is to occupy the home as a primary residence and not for investment purposes as a rental or flip. If someone knocked on the door to the home in the future to investigate and you answered, you should be fine. If someone else answers, and they are living there full time you could be in trouble.
0 votes Thank Flag Link Tue Feb 7, 2012
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