say that somone found a 4 family money maker that would be a great investment. say this person had great credit and very little cash… the seller does not want to hold any paper
how bad would it be if this prospective buyer told a lender that he intended to move into the new investment property in order to obtain 100% ltv financing? and what if “something came up” after the deal went through, and the buyer didn’t actually move into the property?
in other words, what could happen if someone said the investment was going to be owner occupied, but was lying?
To me this depends on the institution. But its definetly not worth messing around with. Its like sticking your hand in a jar of snakes, some nonvenomous, some are.
Lenders if greedy enough find this out will by the contract written force full payment of the loan immediatly, and take possesion of the house. They will also do a suit against you at times too, giving them the home back so they can sell it for money, and still hold you responsible for the entire loan balance.
And its because of breaking contract with the owner occupied. I see these extreme actions taken on single family homes more often with muliplexes.
lenders these days have a lot of more time to look at deals, how they are structured, etc. comnapred to a few years ago when the business was crazy. Also, they have plenty of people parade thru claim to buying for owner-occupied and are really not. So, if the proposed owner-occupiant is already living is really nice neighborhood and this multi-unit is on the wrong side of the tracks, then its not going to fly.
Please be aware, what you are proposing is mortgage fraud. BTW, at closing you almost certainly will have to sign a form comfirming you will occupy the property as a primary residence. The arguement of"something came up and now I’m not going to live there" is not going to hold up.
I used to look at things this way “what if I just…” Trying to justify breaking the law. I was a kid. Now 12 felonies later I wish I just followed the rules like everyone else. Breaking the law is breaking the law. Whether it be fraud or selling drugs.
What these other posters are telling you is absolutely true. With Real Estate and Mortgage fraud being such a hot issue right now you would be messing with fire. There are plenty of lenders out there that will allow you to go stated income or no ratio to qualify for the NOO property that you need not risk your future for one deal. If it is as hot a deal as you think it is; have it looked at by your mortgage broker and see what they can do for you.
I’m not exactly sure your financing options but there’s a ton of programs out there where you shouldn’t need any cash, or maybe a couple of thousand dollars out of pocket. I’m sure mortgage professionals reading this forum can help you. I’ve got “decent” credit but have gotten 100% financing with a 6% sellers concession letting me into the property with about $1000. Keep looking and good luck!
A friend bought a house in Rossmoor, CA last year but didn’t end up moving in immediately after escrow closed. They fully intended too, but fixing the place up took a lot longer than planned. Anyway, I’m assuming someone went out there to check on things, but they knew. She got a call four months after buying it, not from the original lender, but the company that bought the loan, and was politely threatened with having the entire loan…
with my credit and DTI he was albe to get me at least a stated 70/30 ......
Good for you! Going O/O may be easier and have a slightly lower rate. However, is it worth the stress that you will put yourself through?
Depending on your parameters there are several lenders that will still do 100%. N/O/O programs are getting tighter on their qualifications due to the high foreclosure rates on this type of property.
Yes it was vacant, but they had contractors coming and going all the time and the garage was full of their junk. Whether because of the notice or not, I don’t know, but they ended up moving in before the kitchen was done and are still working on the place a year later ;D
This sounds great to me, but I’m just the kind of guy who is constantly working on my home. …seriously!
You’d think the lender would be a little more understanding of the situation/intent. More so since they had their posessions in the garage while work was in progress.
Isn’t the definition of a resident based on a) occupants possessions in the home, and b) it being their primary mailing address?
I know many, many people who are NEVER home. (and many more who never answer the door when they are)
I checked back and got some more information on what happened. The reason they were told (by their agent) for all the interest by the lender was because they placed they already lived in was in the same neighborhood, and was larger. Of course it also had no yard left, and they wanted a pool
I had the same thing happen on a house I bought 2 houses ago. The fix up was going to be about 2 weeks so we didn’t take out a builders risk insurance policy on it just regular structural insurance. The insurance underwriter guys did an inspection found it vacant (aside from contractors) and threatened to cancel the insurance policy. By the time I got the notice I had a signed lease and I faxed it over and there was no harm no foul. Basically the moral to the story is they do come by and kick the tires every now and then.
One way to get caught…The insurance for owner oc vs landlord is different. When you provide your insurance binder at closing a smart bank atty will know the difference.
In MA you get caught messing w insurance NO ONE WILL insure you again. Kiss your investing career goodbye!
I’ll be honest, I have almost took the risk and attempted 100% financing saying I was going to move it. Overall its not worth it. With all the loans out there its easy for an investor to get 95 - 100% financing.
