Home Buying in San Diego>Question Details

fbrown357, Home Buyer in San Diego, CA

Are there exceptions to the Fannie Mae owner occupied rule if you are buying the house for your elderly parents who have little to no income?

Asked by fbrown357, San Diego, CA Sun Dec 30, 2012

It would be their primary residence. If there is such an exception, can some point me to the source of info.

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Answers

17
Robert H. Ashburner, Jr.’s answer
The simple answer to your question is yes! Most loan officers and underwriters are shocked when they actually read the seller guide. Look below at item 3. The Fannie Mae Single Family Selling Guide Section B2-3-01 should provide some more clarity to this topic under Occupancy Type Requirements for Principal Residence Properties items 2 and 3 (08/30/2011)

Principal Residence Properties
A principal residence is a property that the borrower occupies as his or her primary residence.
The following paragraphs describe conditions under which Fannie Mae considers a residence to be a principal residence even though the borrower will not be occupying the property.

Borrower Types

1) Multiple Borrowers
a. Only one borrower needs to occupy and take title to the property, except as otherwise required for mortgages that have guarantors or co-signers. (See B2-1.2-04, Continuity of Obligation (06/28/2011).)

2) Parents wanting to provide housing for their physically handicapped or developmentally disabled adult child
a. If the child is unable to work or does not have sufficient income to qualify for a mortgage on his or her own, the parent is considered the owner/occupant.

3) Children wanting to provide housing for elderly parents
a. If the parent is unable to work or does not have sufficient income to qualify for a mortgage on his or her own, the child is considered the owner/occupant.

Utilizing the rule above allows children looking to provide housing for elderly parents to purchase as if they were purchasing the home as a primary residence providing significant savings to a family that is already stressed with the care of their parents housing needs.

Robert H. Ashburner, Jr. – Loan Officer
NMLSR 607856
Monarch Mortgage
2809 South Lynnhaven Road, Suite 200
Virginia Beach, Virginia 23452
(757) 752-5851
3 votes Thank Flag Link Wed Jan 23, 2013
This is not a second home. It is a primary residence! No need for exceptions.
FNMA lending guidelines state:

Children wanting to provide housing for
elderly parents
If the parent is unable to work or does not have
sufficient income to qualify for a mortgage
on his or her own, the child is considered the
owner/occupant.

No exception.
Tell your lender that it is considered a OWNER OCCUPIED per Fannie Mae.
If they do their research...they will know that this is how it goes.
1 vote Thank Flag Link Sun Jan 20, 2013
As of 04/15/2014 ("a date that will live forever in infamy"), the answer to this question may be found in The Fannie Mae Single Family Selling Guide Section B2-1-01: Occupancy Types (04/15/2014), second unnumbered section "Principal Residence Properties" immediately following the short first unnumbered section "Overview" at:

https://www.fanniemae.com/content/guide/selling/b2/1/01.html

"A principal residence is a property that the borrower occupies as his or her primary residence. The following table describes conditions under which Fannie Mae considers a residence to be a principal residence even though the borrower will not be occupying the property. "

... (Conditions for Multiple borrowers)...

"Parents wanting to provide housing for their physically handicapped or developmentally disabled adult child: If the child is unable to work or does not have sufficient income to qualify for a mortgage on his or her own, the parent is considered the owner/occupant."

"Children wanting to provide housing for parents: If the parent is unable to work or does not have sufficient income to qualify for a mortgage on his or her own, the child is considered the owner/occupant."

I found this when researching the same question in connection with providing for my disabled adult child. I hope it helps people in a similar situation who are wondering how they can obtain the official, quotable Fannie Mae source for this less well known information.
0 votes Thank Flag Link Thu Feb 19, 2015
The mortgage brokers gave you a lot of good information, but it all pertains to loans. Since you're paying cash, I'll speak to that:

It's not an exception exactly, but I believe that in this case if your parents are also on the title and the purchase contract, it is an "owner-occupied" transaction.

HUD and Fannie Mae (and most REOs) do require you to purchase the home through an agent, since the government doesn't broker its own homes. The listing agent should have the most accurate answer regarding First Look and owner-occupancy requirements.
0 votes Thank Flag Link Mon Mar 18, 2013
The maximum age for credit documents for new construction is
0 votes Thank Flag Link Sat Mar 16, 2013
The maximum age for credit documents for new construction is
0 votes Thank Flag Link Sat Mar 16, 2013
You dont need to do it as a second home. What you could do is structure a deal utilizing a term called a "non occupant coborrower". That means that your parents go on the loan to satisfy the OCCUPANT requirement, and you go on the loan to utilize your qualifying income.

You can go FHA with 3.5% down (and all FHA fees), or you can go conventional through FREDDIE MAC. Not Fannie Mae. Freddie mac will let you "blend ratios" while Fannie Mae will require that your parents have qualifying income on their own (which defeats the purpose of the whole deal).

If you need help with this, give me a call and I can point you in the right direction, and I can even get the file approved in about an hour or so, so that you are ready to make offers, etc.

Daniel Lehman
daniel.lehman@wjbradley.com
NMLS 227076
858-345-4725
0 votes Thank Flag Link Mon Jan 21, 2013
Rene is right. Purchase it as a second home. Your lender will need a letter of explaination as to the purpose of the purchase, but it is certainly possible.
0 votes Thank Flag Link Sun Jan 20, 2013
Yes there is! Fannie Mae has a guideline that allows you to declare it as a second home. I've done this for many clients (myself included).

Rene J. De Blanco


P. 619-610-9882
C. 619-908-9453
F. 619-810-1654
E. Rene.DeBlanco@BluFi.net
_______________________________
BluFi Lending Corporation
1450 Frazee Road, Suite 301
San Diego, CA 92108

http://www.BluFi.com/ReneDeblanco
0 votes Thank Flag Link Wed Jan 16, 2013
If the parent is unable to work or does not have
sufficient income to qualify for a mortgage
on his or her own, the child is considered the
owner/occupant.

The above is taken from the FNMA Underwriting Guidelines directly regarding Elderly parents.
All lenders who take their loans to FNMA will not have a problem with this scenario for you.

You must qualify for your own living expenses, as well as the living expenses for the parent.

Let me know if you need specific questions answered. cgravelle@diversifiedmg.com
0 votes Thank Flag Link Wed Jan 2, 2013
No rules if you're paying cash, except for the timeline of certain bank-owned properties offered to owner occupants first.
0 votes Thank Flag Link Sun Dec 30, 2012
Michael Walsh has the right idea... Even if they have little income, they can go on the loan under Fannie Mae's non occupant coborrower income guidelines... If you want to put less money down, FHA has similar rules...

Worst case scenario, you can most likely have the underwriter OK the property as a second home, where guidelines/rates are similar to owner occupied... I have done that before in a situation with parents purchasing a home down the street from their residence to assist their daughter with special needs...

Daniel Lehman
858-345-4725
0 votes Thank Flag Link Sun Dec 30, 2012
It is owner occupied if your parents name is on the contract, 3 of you can be on the contract.
Let me know if I can be of assistance.
I have been specializing in listing & selling bank owned properties for the last 6 years.

Elisa Peskin
Real Estate Broker
(619)933-9092
0 votes Thank Flag Link Sun Dec 30, 2012
Hi there,

Yes, it's possible. Check out the "The Family Opportunity Mortgage".

You can avoid treating your parents' new home as a second property by accessing The Family Opportunity Mortgage. This program, which is offered by some lenders, allows you to buy a home for your parents and treat it as your primary residence. Even though you won't actually be living there, for tax and mortgage purposes, it will be considered owner occupied. You can take advantage of this program only if your parents have a low income and would not qualify for a mortgage.

The Family Opportunity Mortgage carries no distance requirements. You can buy your parents a home as close as you would like to your own home, and it will still qualify for a loan. Fannie Mae and FHA, as well as some other lenders, offer this program.

I hope this gets you moving in the right direction.

Royce Kemp
Premiere Properties
0 votes Thank Flag Link Sun Dec 30, 2012
You could try and qualify under Freddie Mac's Non Occupying CoBorrower guidelines.


Mike Walsh
858-864-8924
Sr. Loan Officer The Lending Company
3 Time Winner San Diego Magazine 5-Star Winner Customer Satisfaction
0 votes Thank Flag Link Sun Dec 30, 2012
It would not be a loan we would be paying cash. We would not be trying to sell, rent, etc the home though. It woudl not be an investment. It would be parents primary residence. I have seen morgage exceptions for for this, but not sure about buying within First Look period with the owner occupied primary residence certification.
0 votes Thank Flag Link Sun Dec 30, 2012
If there is no loan involved, I would suggest then that you put your parents on the contract as buyers, perhaps in addition to you, and then keep the ownership for as long as dictated by the Fannie Mae contract. Have your real estate agent confirm the requirements and then go for it! Let me know how it works out!
Flag Sun Dec 30, 2012
The best way to get this answered is to call an expert lender. I would suggest you call Marsha Lenyk the president of Award Mortgage. Marsha can be reached at 619-992-1504. She has been doing loans for my clients since 1988 and is extremely knowledgeable.
Steven Campbell
Real Living Lifestyles
619-972-1552
0 votes Thank Flag Link Sun Dec 30, 2012
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