Home Buying in 92008>Question Details

vahedb, Real Estate Pro in Carlsbad, CA

i am buying a owner occupied home as cash from fannie mae what happen if i cant live there and end up renting it?

Asked by vahedb, Carlsbad, CA Thu Nov 1, 2012

Help the community by answering this question:


If you know that Fannie Mae wants to sell this property to owner's occupied only, you better check the documents that you are signing. Generally speaking, when you are buying this type of property Fannie Mae make sure to included addendums where stablish that you will be buying it as a primary residence or you are subject to certain penalty.

Best of Luck,

Maria Cipollone

Century 21 Tenace

3 votes Thank Flag Link Fri Nov 2, 2012
You mark "intend" to move in. Things happen. Things change (within 1 year, 1 month, 1 week, 1 day). So to safeguard against it all, try to move in. If you've lost your job, changed job locations or need to care of a family member you can move out and rent it.

If you go to purchase another home in 12 months, they will pull the note on the first and inspect it. You may be forced to pay investor rates on the second home despite you actually moving into this one.

I would recommend you try your best and follow you signatures by "intending" to move into the unit. If it doesn't work out, things like this happen, but keep the electric and water bill in your name for a year. Just pass on the costs to the tenants. You should be fine.
1 vote Thank Flag Link Mon May 27, 2013
The intent of those homes are for owner occupied buyers. If you buy a home with the intent for it to be your primary home and there may be follow up from Fannie Mae to make sure that you are occupying the home as promised in an affidavit that you will need to sign in escrow. If your situation changes and you can not live in the house as long as the required minimum months, then you need to be ready to answer to them with a good story that proves that your intent was not to be an investor taking advantage of a home program that is intended for an owner occupied buyer. By the way that you are asking the question it sounds like you are not closed and already planning on not living in the property. You will be asked to sign paperwork stating that you are intending to make this your primary residence. It is fraud to knowingly misrepresent yourself. I would be very careful about matching your intentions and story to the paperwork that you will need to sign.
1 vote Thank Flag Link Fri Nov 2, 2012
does anyone know someone that got caught at and if so how
Flag Thu Sep 26, 2013
When offering on the property, the buyer's agent can mark on contract whether the buyer intends or not intends on occupying the property. Have your agent submit the correct contract information.
0 votes Thank Flag Link Wed Jan 16, 2013
Sounds like you are paying CASH for a Fannie owned property? If so, then you would not have a loan of any type on the property in which case you can live there or rent out as you wish. This issue is only if you utilize a mortgage to purchase this property. However, your Capital Gains tax implications could change when you sell. Check with your CPA for tax advice.
0 votes Thank Flag Link Tue Jan 1, 2013
You should look into the papers you are or have been signing.
The Fannie mae Police don't look to kindly on this type of Fraud.
Is there a Fannie Mae Police? Well not really but than again yes.
Lets say you bought the property and lets say you bout it as an investor....
Lets say you rent it out to people who the neighbors love to hate. You know, "Renters."
Well every neighborhood has 3 Realtors and one of them cares a little too much about their neighborhood. They know about each property that sells in the neighborhood. They watch their home price value go up and down. Rentals arent the best for home values by the way and many Realtors know this and are not happy when see rental signs in their bedroom community. They also know when a house GOVERNMENT such as HUD FANNIE ECT went off the market in say like 9 days they expect a new home owner, not a renter.
They may even introduce them self to the neighbor. When they figure out it is a rental or the name is not right or the renter moves out in 6 months, They may call fannie mae to get rid of the problem renter or cause havoc for the landlord who cheated the system. I heard about one in a neighborhood and now the house is vacant. I do understand they have fines in place. But hey you are an investor with cash you can afford it right?
You may want to consider cancelling the contract or enjoy your move into your new home. The reason the government has these programs is to allow homeowner occupiers to stabilize the housing industry. after 15 days on the market USUALLY you as an investor can buy it.

Harold Sharpe - Broker
So Cal Homes
(951) 821-8211
California Department of Real Estate Broker License # 01312992
0 votes Thank Flag Link Sat Nov 3, 2012
Live there for 6 months at a min. or I would disclose as an addendum to the contract. This will place everyone including your lender on notice of the possibility. I know HUD and some banks have door knockers checking on occupancy. It goes back to the intention of the purchase and could be considered fraud. but I’m not an attorney. Ask an attorney the question, for your protection, would be my advice.
0 votes Thank Flag Link Fri Nov 2, 2012
How would a "door knocker" proove or that you do or dont live there? Couldnt you just have gone to the store, or job, or on vacation?
Flag Wed Jan 29, 2014
Here is the wording in the FNMA owner occupancy certificate. You must occupy the property as your primary residence within 60 days and live there for a year. If you do not do that you may be subject to penalties and fines.

"This is to certify that consistent with the representation made by me in the Real Estate Purchase Addendum, Section 4, Use of Property, 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, unless extenuating circumstances arise which are beyond my control. If the property is a multi-unit property, I may rent units other than the unit that I occupy as my primary residence. Furthermore, I fully understand that Fannie Mae is relying upon my representation of being an owner occupant of the property, and that the sale of the property to me by Fannie Mae is conditioned upon this representation.
In the event that I do not occupy the property as my primary residence in accordance with the above certification, I shall pay Ten Thousand Dollars ($10,000) to Seller as liquidated damages, which amount shall be in addition to Seller’s right to retain any earnest money deposit and any other funds then paid by the Purchaser as liquidated damages pursuant to Section 19 of the Real Estate Purchase Addendum and any other remedy available to Seller at law or equity. Additionally, I agree to pay Seller’s reasonable attorney fees and costs incurred by Seller in enforcing its rights hereunder."

So I strongly suggest that you comply with the terms of the agreement.
0 votes Thank Flag Link Fri Nov 2, 2012
Usually the requirement for the property to remain your primary residence is a loan condition due to risk and the rate you are given. If you are paying cash then I would think you can do whatever you like with the property.

However if Fannie Mae explicitly requires you to own it as a primary residence regardless if it is a cash purchase then they usually require 12 months of owner occupancy. After that you should be able to rent it. Check your deed.
0 votes Thank Flag Link Fri Nov 2, 2012
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