Worcester, MA · Member since 2012 · 14 posts · 2 votes
Hi,
Where could one find the fannie mae requirements for owner occupier bidding?
I am looking for a second home in a beach community where I would split my time between my existing residence and the new house. I would be at the second home at least 4 days a week. On the other side I am interested in this as an investment property and generating a decent return in a 1-2 year period.
I've been trying to pick up a fanne mae reo and have lost the last 2 houses I made offers on to owner occupier bids, 4 more my offer was never was looked at since it was outside the 15 day first look period. It seems that anything decent to renovate and generate quite a bit of equity fast goes quick. Just this last week the house we put in an offer was a complete gut job went to a cash offer, owner occupied. NO ONE could could have lived there and renovated.
Scenario
789 Elm Street, a Fannie Mae REO property, was listed on the market for only four days when the listing broker, Andrew, received an offer for this property. Andrew learned in corresponding with the buyer that she intended to use the property as a vacation home and not a primary residence; however, Andrew neglected to communicate this information to his Fannie Mae Sales Representative and allowed the buyer to submit the offer as an owner occupant. Motivated by his interest to close the deal without additional delays due to First Look™ restrictions, Andrew had the buyer sign the Owner Occupant Certification and indicated this in Section 4 of the Real Estate Purchase Addendum as well.
Analysis
This sequence of events represents a type of fraud categorized as "First Look Misrepresentations." Only owner occupants purchasing as a primary residence and buyers using public funds can purchase a property during the First Look Marketing Period, which corresponds to the first 15 days of listing in all states except Nevada (which has a 30 day Marketing Period). Investor offers may only be considered after the first 15 full days on the HomePath website, when the First Look™ countdown clock is no longer displayed. Fannie Mae defines a buyer purchasing a property for use as a second home as an investor and therefore, ineligible during the First Look™ marketing period. Brokers are responsible for accurately representing the buyer type and may be directed to question the buyer's motivation for occupying.
In the case described above, the listing broker was obligated to submit the offer as an investor offer, notify the buyer that the offer was rejected, and document this activity in the system. Once the First Look™ countdown clock no longer displays on Day 16, the broker should notify the buyer's agent to resubmit if the property is still available.
Resolution
Fannie Mae does not tolerate brokers or their agents participating in any sort of fraudulent behavior. Internal teams are dedicated to monitoring and investigating reports or evidence of suspicious activity. In the event it is uncovered that a Fannie Mae broker is a party to any such prohibited conduct, the broker may be subject to termination and the case may be reported to the agency responsible for investigating and prosecuting such cases.
ACTION!
Understanding First Look™
Brokers are not only responsible for understanding and complying with the timelines and regulations of the First Look™ program, but also for supporting and communicating the "spirit" of the initiative. The First Look™ program continues to be an important contributor in the mission to stabilize neighborhoods. By allowing this period for owner occupants, some non profits, as well as public entities and their partners to submit offers and purchase properties without competition from investors, Fannie Mae encourages home ownership and helps to build stronger communities.
To learn more about the First Look™ program, please review the REO Sales Guide and training materials available on the HomePath resources page. If you have any questions, contact your Fannie Mae Sales Representative or Asset Manager.
Contact Fannie Mae
Suspected REO fraud must be reported to Fannie Mae immediately. It is your responsibility as a broker or agent of Fannie Mae to report suspected REO fraud. Following are two avenues for reporting:
1. Phone Fannie Mae at 1-800-7FANNIE (1-800-732-6643)
2. Report the information via e-mail: [email protected] For more information, additional resources are also available Fannie Mae's Mortgage Fraud Resources page. To navigate to the page yourself, visit www.efanniemae.com and click on "Preventing Mortgage Fraud" in the bottom right hand corner of the web page.
In addition to reporting the suspected fraud to Fannie Mae, we encourage you to report the information to your local real estate board or state licensing authority. Your assistance in fighting REO fraud is greatly appreciated.
I think that to qualify as an owner occupier, you would need to make that house your primary residence. You would need to spend more time there than at you other house and have that address on your drivers license and tax returns. I don't know if Massachusetts has a homestead exemption on your taxes, but that would also determine where you live.
As far as the house you mentioned that sold to an owner occupant that is a gut job, they could purchase the house and move in when it is fixed up. They don't have to move in the day after closing. They just need to intend to use it as a primary residence and then live there for a certain period of time. Maybe they are scammers that are going to flip it, but you don't know that at this point.
I'm not an expert on the intricacies of FNMA's definition of "owner occupant," but I would guess that the requirements are no different than claiming residency in other circumstances (taxes, voting, etc).
Here are some questions that would likely be asked when someone is trying to determine if you're an owner occupant:
- Do you live there more than 50% of the time?
- Do you get your mail there?
- Is that the address on your driver's license?
- Do/would you kids go to school in that district?
- Do/would you vote in that district?
- Do you pay taxes in that locale?
If the answer to all those questions is yes, it's probably your personal residence.
But again, I'm certainly not an expert and this is certainly not legal advice...
owner occupant means this would have to be your primary residence. FM gives you 60 days after closing to make it your primary place.
SO you could set up utilities and change your drivers license and split time however you see fit. You just cant try and sell it or rent it out for one year. Then one year after closing you can do whatever you want to the property.
Hey Matthew - The way that it was explained to me by my attorney is that the Fannie/HUD owner occupant question is governed by INTENT. I have purchased owner occupant through HUD before, while I owned other property, and what I have done just to be safe is changed my drivers license and registered to vote in the area. This shows that I INTENDED to live in the property. I never did - I rehabbed it and ended up renting it out.
Also, when you get your loan, if you are financing, do it as an owner occupant loan. It will get you a better rate and will be extra paper trail just in case.
Also bear in mind that I believe you can not bid owner occupant on another Fannie/HUD for two years, so make this one count!
Hey Matthew - The way that it was explained to me by my attorney is that the Fannie/HUD owner occupant question is governed by INTENT. I have purchased owner occupant through HUD before, while I owned other property, and what I have done just to be safe is changed my drivers license and registered to vote in the area. This shows that I INTENDED to live in the property. I never did - I rehabbed it and ended up renting it out.
But, it doesn't sound like you ever intended to live in the the property. You intended to make it seem like you intended to live in the property, but you didn't actually intend to live in the property, did you?
Not sure I'd recommend that route...and I certainly wouldn't recommend advertising it on an Internet forum like this... :)
Hey Matthew - The way that it was explained to me by my attorney is that the Fannie/HUD owner occupant question is governed by INTENT. I have purchased owner occupant through HUD before, while I owned other property, and what I have done just to be safe is changed my drivers license and registered to vote in the area. This shows that I INTENDED to live in the property. I never did - I rehabbed it and ended up renting it out.
Also, when you get your loan, if you are financing, do it as an owner occupant loan. It will get you a better rate and will be extra paper trail just in case.
Also bear in mind that I believe you can not bid owner occupant on another Fannie/HUD for two years, so make this one count!
Good luck and let us know what happens!
Registering to vote and changing a drivers license is an intent to occupy a house? Right........Hope that keeps working out well for you.
I agree with Ann - the key is that you sign documents at closing stating you intend to occupy the property. I don't believe there are any fannie mae 'POLICE" that check the property after closing.
Hey Matthew - The way that it was explained to me by my attorney is that the Fannie/HUD owner occupant question is governed by INTENT. I have purchased owner occupant through HUD before, while I owned other property, and what I have done just to be safe is changed my drivers license and registered to vote in the area. This shows that I INTENDED to live in the property. I never did - I rehabbed it and ended up renting it out.
Also, when you get your loan, if you are financing, do it as an owner occupant loan. It will get you a better rate and will be extra paper trail just in case.
Also bear in mind that I believe you can not bid owner occupant on another Fannie/HUD for two years, so make this one count!
Good luck and let us know what happens!
So you're admitting to fraud, and recommending others do the same?
No way you "intended" to live in a house and never slept there.
Scenario
789 Elm Street, a Fannie Mae REO property, was listed on the market for only four days when the listing broker, Andrew, received an offer for this property. Andrew learned in corresponding with the buyer that she intended to use the property as a vacation home and not a primary residence; however, Andrew neglected to communicate this information to his Fannie Mae Sales Representative and allowed the buyer to submit the offer as an owner occupant. Motivated by his interest to close the deal without additional delays due to First Look™ restrictions, Andrew had the buyer sign the Owner Occupant Certification and indicated this in Section 4 of the Real Estate Purchase Addendum as well.
Analysis
This sequence of events represents a type of fraud categorized as "First Look Misrepresentations." Only owner occupants purchasing as a primary residence and buyers using public funds can purchase a property during the First Look Marketing Period, which corresponds to the first 15 days of listing in all states except Nevada (which has a 30 day Marketing Period). Investor offers may only be considered after the first 15 full days on the HomePath website, when the First Look™ countdown clock is no longer displayed. Fannie Mae defines a buyer purchasing a property for use as a second home as an investor and therefore, ineligible during the First Look™ marketing period. Brokers are responsible for accurately representing the buyer type and may be directed to question the buyer's motivation for occupying.
In the case described above, the listing broker was obligated to submit the offer as an investor offer, notify the buyer that the offer was rejected, and document this activity in the system. Once the First Look™ countdown clock no longer displays on Day 16, the broker should notify the buyer's agent to resubmit if the property is still available.
Resolution
Fannie Mae does not tolerate brokers or their agents participating in any sort of fraudulent behavior. Internal teams are dedicated to monitoring and investigating reports or evidence of suspicious activity. In the event it is uncovered that a Fannie Mae broker is a party to any such prohibited conduct, the broker may be subject to termination and the case may be reported to the agency responsible for investigating and prosecuting such cases.
ACTION!
Understanding First Look™
Brokers are not only responsible for understanding and complying with the timelines and regulations of the First Look™ program, but also for supporting and communicating the "spirit" of the initiative. The First Look™ program continues to be an important contributor in the mission to stabilize neighborhoods. By allowing this period for owner occupants, some non profits, as well as public entities and their partners to submit offers and purchase properties without competition from investors, Fannie Mae encourages home ownership and helps to build stronger communities.
To learn more about the First Look™ program, please review the REO Sales Guide and training materials available on the HomePath resources page. If you have any questions, contact your Fannie Mae Sales Representative or Asset Manager.
Contact Fannie Mae
Suspected REO fraud must be reported to Fannie Mae immediately. It is your responsibility as a broker or agent of Fannie Mae to report suspected REO fraud. Following are two avenues for reporting:
1. Phone Fannie Mae at 1-800-7FANNIE (1-800-732-6643)
2. Report the information via e-mail: [email protected] For more information, additional resources are also available Fannie Mae's Mortgage Fraud Resources page. To navigate to the page yourself, visit www.efanniemae.com and click on "Preventing Mortgage Fraud" in the bottom right hand corner of the web page.
In addition to reporting the suspected fraud to Fannie Mae, we encourage you to report the information to your local real estate board or state licensing authority. Your assistance in fighting REO fraud is greatly appreciated.
I agree with Ann - the key is that you sign documents at closing stating you intend to occupy the property. I don't believe there are any fannie mae 'POLICE" that check the property after closing.
Nope there aren't any "Fannie Police", but there are other disgruntled investors who can complain to Fannie when you flip or rent an "owner occupied" purchase.
If you've secured owner-occupant financing as well, now you have mortgage fraud.. again, usually not enforced, but I'm sure they'll be looking if there's a default for any reason down the line...
in my original post, I stated that I planned on living at the location 4/7 days a week.
I don't want to commit fraud, I just want a chance at a deal.
the more that I look at it, I am an investor and need to follow those rules.
I am hoping to do a similar series of deals with a second home like I did with my current residence. ie Buy the worst house on the street fix it up over time while I live there, sell it and use the profits to buy the next house and rinse and repeat till I own my house outright with no mtg. We're on our 3rd house and now plan on using the equity we've built up to get us started on the second house.
I'm just a bit frustrated about how long it has taken to get a good deal.
Matthew, I'd be wondering the same thing. It's still all a bit obscure to me, but my conclusion is that you can't buy HUD or Fannie Mae in the first look period if it's intended as a second home. However, Freddie Mac foreclosed homes do appear to be available to second home owners during the first look period. Note though that an affadavit of owner occupancy needs to be signed, and I'm not sure what that entails. More details are available on their website: http://www.homesteps.com/homesteps/homebuyer/firstlook.html
its easy to make it your primary residence. and nobody is going to question how you split your time between two places you own. And as owner occupant you cant rent or sell the proprty for one year.
However if you aren't a cash buyer and plan to finance the home as well as have a mortgage on your current home, you will need to be very clear to your bank which is your primary residence. Banks are usually very cut and dry that if a home isnt your primary residence then its an investment property. The LTV has to be under 70% typically on an investent property. Id be more concerned about getting things straight with your lenders and not committing mortgage fraud.
Again picking your primary residence is easy but when there are multiple mortgages involved that may be the trickiest part depending on your finances and current equity in your present home.
I agree with Ann - the key is that you sign documents at closing stating you intend to occupy the property. I don't believe there are any fannie mae 'POLICE" that check the property after closing.
Maybe not Fannie Mae, but on our FHA loan, the mortgage company and our insurance company both checked to make sure we moved in within 30 days (actually needed an extension as we were out of town that month so carpet didn't go in until about day 36), the mortgage company by requiring confirmation from our homeowners insurance (as opposed to landlord policy), and the insurance company actually requested updates. If you search these forums, there are several people who had to quickly refinance to an investor loan after the mortgage company reviewed their file. Although this is very rare, it can happen. I believe our review was triggered simply by the mortgage company selling our loan soon after closing.
Rob Condy - good catch on the freddie mac letting second home purchasers bid in the first look period. There is a property which we like that will be coming up for sale soon owned by freddie.
Yes, it is clear that one must intend to be an owner occupant and I would not play any cute games with that. However, I think this particular rule creates an artificial market when all people including investors are not included. Why isn’t our government, ie FANNIe MAE , not interested in obtaining the best possible price for the property? Why are they showing favoritism to one group over another? This ridiculous rule should be eliminated. If the house is for sale it should be open to all.
@Ann
Fannie Mae clearly defines what they mean by owner occupied. This is not the case here. The purpose of Fannie Mae's program is to get owner occupy buyers to purchase homes in order to stabilize the already fragile real estate market. They need people to spend.
Not directed at the OP, but I am tracking all properties that I have had interest in bidding on but didn't make it to the investor period. When I find that the properties are tenant occupied or resold I will be reporting the agents to FNMA and the property owner to their lender showing in the register of deeds. So fair warning, if you plan on cheating, you are being watched and there will be consequences.
Me and my boyfriend lost a Firstlook home to an investor. We wrote and called about the fraud and in the end Fannie Mae only claims they will put it on their "watchlist". I suppose the watchlist is just some electronic alert if the home is sold within the first year. I was hoping they would at least get the asset manager to stop by 60 days later and check to see if anybody has moved in. Maybe call the utilty company to see if the owner has the bill sent to the same address. It doesn't appear they do anything. We keep checking the county clerk records to see if Fannie has filed a fine against the owner, but nothing. The Firstlook period is a total joke. It is being abused bigtime.
More details: My boyfriend made an all cash offer on the third day the home was listed. It was priced at $61k and he offered $62k(offered higher hoping Fannie would take ours first). The next day our realtor says the listing agent called her asking if we intened on living there. Did we have enough cash to fix it up within 60 days. Our proof of funds showed we had double the amount and she explained how she already asked if we were going to live there. How we didn't own another home. Our realtor says it looks like they are taking our offer. Will get the news soon. The next morning she calls back saying there is now another offer. We raise ours a few grand, but end up losing it. We waited hoping the offer would fall out of escrow. It never does and ends up closing a couple weeks later. Really fast.
So, we look at the clerk records to see how much we missed the property by. It was a few grand. We looked up the buyers name. Funny, he already owns another home and has homestead on it. We do a google search, and funny, he owns a local home remodeling company. We call Fannie and they say, "well, just because he owns another home does not mean he won't be making this new home as his primary". We wait 60 days and nothing has been done to the property. A month or two later we call. Fannie only says they will watch it. It is now almost a year later and the owner never moved in. He has filed for homestead exemption again on his prior residence, not the home he bought and promised to live in. He is now really fixing the place up, new roof, fence, painting. Looks like he will be putting it up for sale now that the year has passed.
So, investors really don't have to be scared. Just lie and wait a year. I have proof in my case that Fannie doesn't do anything. As an owner occupant who missed out on our dream home, I hope that the more honest investors who see similar fraud will report it. Maybe eventually Fannie will do something about it. This abuse is not fair to owner occupants, or honest investors who also miss out. I am certain that if the home we wanted had gone to the 15 days where all investors could bid, Fannie would have gotten an even higher price. Fannies fraud hotline is 1-800-732-6643
@Madeline:
That is very frustrating. I have lost a few bids, and in a couple cases I believe that the investor (I know it was purchased by an investor) submitted their bid prior to the investor period. That is frustrating, but not nearly as frustrating as it would be if I were looking for the place as an owner occupant. I have talked to the agent I use to submit my offers and have considered calling the people out on it. A call to the hotline next time looks to be at least one step that I can take.
Here is what Homepath has on their website for those who suspect fraud:
"Report possible fraud directly to Fannie Mae at [email protected]. You may also call our Fraud Tips Hotline at 1-800-7FANNIE (1-800-732-6643) to report possible fraud or if you have any other concerns relating to a Fannie Mae-owned property."
I know I told this story in another thread about a family friend who when he was constantly busy flipping property after property and many HUDs. He put OOC on one of the contracts and had used and investment loan. Fast forward 5-6 years. He was was audited and investigated by HUD. They fined him thousands.
I do not recommend it and I hope anyone who falsifies those documents reap the repercussions.