Refinancing as owner occupant and fraud

2 Replies

Question about cashing out refinancing. Currently fixing/ househacking a 2 family home.. is it fraud to refinance as a owner occupant then rent out the apartment you are living at after the refinance is complete? Owner occupant refinace is 95% LTV with a va loan. I have already been living there over a year.

Thanks

I know that the IRR VA refinance loan does not require owner occupancy. I'm not sure about the other VA refinance products. Check with the VA or the lender to find out if it requires it or not.

yes

It would seem that if you claim "owner occupant" and you are not the owner or not the occupant, then that would be a false statement/misrepresentation, and therefore fraudulent...

However, it is quite common for a person to obtain an owner occupant loan, live in the property for some time, and then if life circumstances change, they may need to rent a portion of the property or even move out and hold the property as a straight rental investment property, without changing the status of the loan.... 

Since you are starting a new loan period it would be reasonable that whatever you state would apply to the new loan period.  Ultimately it would come down to intentions, timing, what can be proven, if it ever went that far.  If you know you don't plan to stay, then just do the safe and right thing and do not claim owner occupant.  Just my opinion...