Saying You Will Be Owner Occupied
I am looking at a house I am interested in buying that. It will be for investment, but I want to get good terms and interest rate. I know that technically is fraud to say you will be owner occupying the house when in fact it is just for investment. I know people do it all day long, but is it a bad and dangerous idea to do it?
The fine can be up to $10,000 and you can get a few years in prision. Are you willing to take that chance?
No offense to Icashman, but I never heard of such a thing ever happening. I too am from South Florida, so maybe it's more lax in our region. I know a lady who moved to a " new personal residence " 3 times last year...... just my 2cents.
It is obviously unethical. But your right, people do it everyday. It is virtually impossible for a lender to determine that a property is or is not a 2nd home as long as the property is more than 20 miles from your primary residence. However, it is up to the lenders discretion as to whether or not your intent is use the property as a 2nd or investment. Lenders don’t believe that homes that are truly 2nd’s would be located 10 miles away from the primary residence located next to a railroad track and a scrap yard.
Obviously if you have multiple properties and your claiming they are all 2nd’s, you will throw red flags.
Perhaps due to the high level of tourism in Florida, lenders are, indeed, lax on not approving multiple “2nd” homes.
Either way 10K or jail time sounds pretty bad.
Good luck!
gmat,
Glad to meet you.
Certification: I/We certify that the information provide in this application is true and correct as of the date set forth opposite my/our signature(s) on this application and acknowledge my/our understanding that any intentional or negligent misrepresentation(s) of the information contained in this application may result in civil liability and/or criminal penalties including, but not limited to, fine or imprisonment or both under the provisions of Title 18, United States Code, Section 1001, et seq. and liability for monetary damages to the Lender, its agents, successors and assigns, insurers and any other person may suffer any loss due to reliance upon any misrepresentation which I/we have made on this application.
If we as professional investors say everyone does it, then when the first investor goes down the long lonesome Federal Highway to Prison, is this when we say everyone does it they just got caught or should we say we don't do it because it is against the law.
lacashman is correct, who wants to be the first one to test this and then bring discredit to our profession when they get caught.
There are a few investors who are less than ethical already don't add to the list.
John $Cash$ Locke
Loan Fraud is a serious crime, and is being looked more and more closely. While many people commit loan fraus and appear to escape penalty, that doesn't mean it is acceptable.
Consider many people shoplift and don't get caught, but I wouldn't recommend that as a way to pick up merchandise.
The extra cost to have an investment vs. personal property is not all that significant. It is better to be honest and pay a little more. Integrity is priceless
To get a little off the subject but relevant. On Thursday in Birmingham,Al. an investor who rehabbed and sold homes for no money down was indicted for fraud,after 4 of his employees pleaded guilty. He stated on loan applications that family members gifted the down payments when he did it himself. HUD's policy is that they will not insure a home loan when a seller makes a down payment. Is going to jail worth saving a few bucks on a mortgage!!!
gmat,
To the excellent advice you have already been given by several posters here, I would only add...
Even where there is no criminal penalty, lying always carries a penalty. There's always a "price" to be paid. If it's not a jail sentence or a fine, it could be your good name and reputation. And once that's gone, all the great deals you could ever do, I believe, would be a poor substitute.
Quote:
On 2004-04-03 13:44, Raj211 wrote:
No offense to Icashman, but I never heard of such a thing ever happening.
Don't kid yourself it happens, it just does not get as much news time as the big flipping cases.
Freddie Mac, Hud and Fannine May are no longer waiting for a loan to default before the investigate for fraud. They are now data mining to identifiy bad loans early. http://realtytimes.com/rtcpages/20040331_mtgfraud.htm
It is not worth the risk.
Every time a buyer is is "moving" into a new home and is not selling the one they live in. A letter of explaination is required for that move. If the real estate agent, buyer , and broker is involved that is called colusion. For the difference in the rates is it really worth it. Only you can answer that question.
Lori
[addsig]
If you get away with it you made a few bucks, but you'll be looking over your shoulder the rest of your life, I don't believe there is a statute of limitations on this type of CRIME!! and guess what else, if you do get caught no one will ever lend you another cent----ever, the few bucks are not worth the thousands or millions you can make.
Also, with a good loan officer who knows his loan programs you can get virtually the same rate and fees as an O/O. Just say no!
and the most important reason has yet to be mentioned
"What!Do you not know that unrighteous persons will not inherit God's kingdom?" 1Corinthians 6:9,10
Quote:
I know a lady who moved to a " new personal residence " 3 times last year...... just my 2cents.
She moved!
She occupied!
She moved on!
Maybe not exactly the way it was intended, but definately not the same.
My 2 cents,
Jeff
Banks are unethical. Take control and if you are moving into it and workingo on it then go for it. It is your residence. As long as you dont do it every month no one will be the wiser. If anyone asks have a back up excuse and they will keep moving.
There are fines and probs etc, but its like J walking in New York city, no cop will arrest you for walking when it says do not walk.
Just a thought.