FHA Owner Occupied Terms

6 Replies

I am looking to get an FHA loan on 3 unit where i will be living in one of the units. My question is regarding the term "Owner Occupied".

Lets say i keep one unit for myself and pay all bills etc but i live somewhere else? Is that legal and valid way to do it ? What if i set my personal address to that unit ? and my wifes address for where we actually live?

Just trying to understand what my options are? As the property im looking at is out of town where i work/live as of now.

@Inam Rehman

A simple LexusNexus search will get you caught and then it becomes Mortgage fraud. If you tenant has any mail delivered or gets a phone or cable set it it will show.

  • Prison. Prison penalties for mortgage fraud can be significant. A conviction for federal mortgage fraud charges can result in a federal prison sentence of 30 years, while state convictions can last a few years or more. Misdemeanor fraud convictions can bring jail sentences of up to a year.
  • Fines.Fines for mortgage fraud are often extremely high, especially when professional fraud is involved. A conviction for a single count of a federal mortgage fraud can result in a fine of up to $1 million. State fines can range from a few thousand dollars for a misdemeanor convictions to $100,000 or more for felony convictions.
  • Restitution. Mortgage fraud convictions often include restitution payments as well. Restitution is different than a fine, though they both involve money. Restitution is designed to compensate the injured party for your wrongdoing, while the government imposes a fine as a penalty. If, for example, you are convicted of mortgage fraud after you make false statements when applying for a mortgage, you may have to pay restitution to the lender in addition to your fines.
  • Probation. Probation sentences can be imposed for a mortgage fraud conviction separately from, or in addition to, fines and prison sentences. Probation sentences for mortgage fraud typically last at least one year, but longer terms are common. Someone on probation must meet specified court requirements, such as making regular reports to a probation officer, submitting to random drug testing, and refraining from committing other criminal acts.

It's so not worth it! Besides the long answer, mortgage fraud is a federal offense. I've heard the cost of an attorney for a federal charge is often 6 figures.

@Brianna S. Thank You. I do understand how bad it can be. I am just trying to understand what Owner Occupied really means ?

My current status is; im living in a hotel (out of state) for past year or so for job reasons and i do not have any apartment leased. So if i buy owner occupied property but still keep on living in hotel for say atleast 6 more months after purchase would that be valid way to do FHA ?

@Laurie Souders I am not willing to commit fraud and wont ever! I was just curious about my situation as i explained in comment earlier. Any thoughts over that ?

@Inam Rehman According to FHA to qualify for OO you must move into the property as your primary residence within 60 days of buying it and must reside there for 1 full year

@Brianna S. Thank you Brianna. It makes sense to me now.

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