I think a lot of people don't realize that loan fraud is a federal offense. Don't write anything on your application that isn't true. Don't exaggerate your income, don't lie about occupancy, don't lie about anything when applying for a loan. The chances of you getting caught are very small but the penalty is prison time. So not worth it.

http://www.hudoig.gov/sites/default/files/documents/2014-CF-1801.pdf @John Rooster First case I saw.

You don't know the buyer is even getting a loan. The buyer may be paying cash. You are conflating The Bank selling the property with a hypothetical insured lender which doesn't exist. Point missed

John, read what it says, loan OR transaction, deceiving OR providing false information, breaking it down further; false information in a transaction with the insured lender as the seller, = fraud. If you conduct any business of any kind with a bank don't be pulling anything based on or using any misleading information, verbal, written or by implication. The size or scope of the sneaky transaction is irrelevant, anything that is done that does or even could cause a loss is punishable as a felony. If everyone cheated a bank out of $100 it threatens the banking system and federal insurance claims. If you are dealing with a bank you better be shooting straight, they clearly have the upper hand from a legal aspect. The same is true with HUD as well as Mark pointed out. There are many issues where you may think you have to be proven guilty of a crime, this is one area where you can simply be accused of a crime, the act or attempt itself is a crime, and you'll be defending against the accusation that you attempted to do something, you'll likely lose. I have no idea how many people thought they could pull one over on a bank and ended up in prison, but I know there are such people in prison. They all thought they were smarter than they were. :)

That isn't a court case. Try better

It is called Mortgage Fraud and there is no way around it. On Fed properties Wait till Owner Investor period ends, see if property is still available, make credible offer, probably all cash.

Doesn't matter what the law is. Lying to the an insured lender is the same as lying to the feds.....which makes it a federal crime. How hard is that to understand? Intent to deceive and defraud are not that hard to prove, especially when the intent was to deceive or defraud.

The person listed in that case ended up paying a penalty to get off. It seems that some people will still try to violate the law if they deem the gain is more than the penalty if caught. This reminds me of the oil spills and illegal dumping in the ocean when I was a kid. These oil companies might save 100 million dumping but only pay 10 million in fines at the time. So by their standards they were profiting 90 million. It wasn't until the fines were raised so high that most didn't even think about doing it as perceived gain was outweighed by the risk. I believe most honest people would not want to violate laws for financial gain.

How does one circumvent an owner occupied clause on REO's

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How does one circumvent an owner occupied clause on REO's

Spencer Simon

Real Estate Investor · Rougemont, NC · Member since 2014 · 12 posts · 0 votes

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Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes

12y

Sometimes I wonder if posts like these are plants by DAs or AGs. But to give them credit, I think their posts would be more creative and comprehensive.

Don't circumvent an owner occupant clause. Done.

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Andy Robison
Investor · Kansas City, MO · Member since 2013 · 465 posts · 170 votes
12y
Everyone calm down he is asking a simple question. It requires a simple answer. You lie and deal with consequences states above
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Seth Cunningham
Investor · Mandeville, LA · Member since 2013 · 15 posts · 2 votes
11y
Not bringing this back up for my own interest in doing so, but have a thought. I am going to look at an REO property today, C class area, that needs a lot of work according to the listing agent. If I do decide to make an offer the investor offer period opens up tomorrow morning. I have been told, not values obviously, that there are already 2 cash owner occupied offers. Listing is 80k.
My question is, who even has 60, 70, or 80k in cash that is willing to live in this neighborhood for a year and put in 20k-30k in repairs? Do investors paying cash step around the OO offer period since they are not going to be checked by the lender?
Sounds like a flipper getting in early offers to me, but i could be wrong.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
11y
@Seth Cunningham
good questions and points.. I have no doubt there are those that do this.. but they are risking federal crimes... one might want to just follow this one.. and see who ends up owning it ( check public records) then see who ends up living in it... easy enough.. the that will answer your question.. and if you think some local investor is not playing by the rules you can follow your conscience on that one. There are plenty of investor Realtor lender networks that got wrung up and are in jail today trying to boop the banks.
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Wilson Churchill
Madison Heights, MI · Member since 2014 · 471 posts · 132 votes
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@Spencer Simon @Jay Hinrichs
I think Jay gave your best option. At least one of the owners has to live in the house. You could put a friend or relative on the title and have them live in the home. Of course there is going to be some risk if they refuse to release their claim at some point.
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Seth Cunningham
Investor · Mandeville, LA · Member since 2013 · 15 posts · 2 votes
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@Jay Hinrichs
Thanks for the quick response. Whether I end up putting an offer on it, I think I will keep up with it just to see. Not sure what I'd do with the information if it comes out how I suspect.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
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@Seth Cunningham
as a NMLS licensed mortgage banker and a licensed RE broker I would have a duty... that's what I know
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