HUD owner-occupied bid period does joint ownership qualify?

Question

I have a son who can't drive and recently got a job some distance away. There aren't many rentals in walking/biking distance to his work and as a landlord I know he would be hard to place anyway. I saw a HUD home (now gone) for sale and was wondering would he qualify for the owner occupied bidding period if we joint title the property with him? He would live there with roommates for at least a year and the location (Medway, MA) has other jobs for him so the location will outsurvive this job. All I saw from HUD is an addendum to the sales contract. He would be an owner occupant I would not.  Anyone have experience in this area?

Colleen F. · Answer

@Bruce Lynn  I no longer ask myself about what judges and juries would think having seen the justice and the tort system acting very badly in my life. Thinking might be a big  overestimation on what these people do.

I asked would  he would qualify under  the HUD rules as owner occupant if we held title jointly, you don't offer information one way or the other so I appreciate you taking the time to answer but not very helpful. You also come across with insinuations  we are gaming the system, an unfounded presumption on your part.

I feel comfortable that the owner occupant criteria in principle would be met. My son would be the ultimate owner because he would in fact live there, not skirt the system actually live and work in the area and I would not claim to be an owner occupant he would. We forsee him staying in the area,  we won't. This isn't an investment  property in disguise for me, he needs a place to live and would also be paying but over time because right now he is just getting by and yes he would need roommates to cover the cost.  Would you question whose income paid upfront if we were talking about buying him an education?

We are not looking for a discount, we are looking to get an opportunity to bid on a property in the owner occupant period if that is legit so we might actually find something now rather then later. Not looking to get cheaper then rent, if you read my  post you will see we have a housing problem to solve and are trying to find a way to solve it. He will have trouble renting too even if he could find something.  Should we get this going and someone else who is bidding gets pissed off let them turn us in because in reality he would be living there.

If you are some new assistant prosecutor...  or I am stepping on your toes go for it....

Bruce Lynn · Answer

I always think....of the question like this.....what would a judge or jury think?....how would they decide?

If you buy it, but don't live there and have a primary residence somewhere else...my thought would be you are not an owner occupant.  If you son is on the deed, but he did not get a loan or pay for it, then he is potentially a tenant, now a real owner occupant.

Who do the roommates pay rent to....your son or someone else?

Who's name is on the mortgage.

If you pay cash, where did the cash come from....who's account, who's income.

Some people think these deals are anonymous....maybe they are...I've never heard of anyone getting busted...but people do watch...you never know who else is bidding....losers can get pissed off, figure it out and turn you in.

To me it's not worth rolling the dice on....you're probably not getting much of a discount and you're trying to skirt the rules...you're messing with the federal government.... every now and then someone comes along and wants to prove a point, some new assistant prosecutor....maybe they are the ones that lost the deal or another similar deal....and then think....hmmm....I could solve this problem of non-owner occupants bidding during the exclusive period.....it would cost you way way way more money in legal fees defending prosecution or paying fines than to me trying to save a few bucks on rent money would be worth.  I think you just never know who's toes you are stepping on in situations like this and you don't probably want to be made an example of by the feds.

Brian White · Answer

Colleen, contact me off line.

Colleen F. · Answer

@Greg H.  Well for being on the deed he doesn't have the money we do and he can't own it outright (for lots of reasons) we would also not be gifting a house. So keeping our name on it seemed to make sense but it is just a preliminary idea we haven't spoken to a lawyer on how to structure it.

For lending I was thinking with the current lending landscape it wouldn't be as simple to lend him the money as what we have done with others in the past where we just had a lawyer draw up the papers. I would definitely want a loan secured against the house and recorded. Am I over-reading all these comments on lending regulations  or are there exceptions for  less then arms length transactions?    The houses we considered would all be cash purchases.

Greg H. · Answer

Why do you want to be on the deed ?

If you are paying cash for the property then just become the lender and there are no issues at all

If you are wanting to be on the deed to be able to obtain financing, the answer is maybe or maybe not.  The type of financing will have to be owner occupant financing so you as the primary borrower will have to intend to occupy as an owner occupant