Legal Questions on FHA Loans

[Lee Stephens]

Hi BP,

I'm an investor from Chicago looking to potentially purchase my first property using an FHA loan. If I went this route I would rent out all of the units from day one (i understand that this is only permitted after 1 year of owner occupying) which brings me to a couple questions..

1. Has anyone been checked on to ensure they were using the FHA loan properly and occupying one of the units?

2. Do you think this is a risk worth taking?

[Brie Schmidt]

@Lee Stephens - a simple lexus nexus search is how they check.  In 5 minutes they can tell if you occupy the property and you sign a document that you intend to live there for 1 year.

Mortgage fraud schemes involving federal agencies like the FHA may prosecute offenders at the federal level depending on the severity and amount of money involved. Cases may be charged as a felony or misdemeanor and involve jail time, fines or restitution if victims experienced monetary losses. In cases of federal prosecution, penalties may include up to 30 years in prison and up to $1 million in fines.