How an investment property be repositioned as an owner occupied?

4 Replies

In obtaining a contract... in many markets a Cash Offer is needed to be accepted just to get an Owner Occupied home.  How would an investment asset be repositioned to an Owner Occupied Single Family residence?

Typically, for an investment loan, the developer is not allowed to live in the asset. I do believe it is illegal for an HML to loan to an "End buyer"/owner occupant? Repositioning would be to change from an investor/developer to owner occupant and/or to modify the loan terms to satisfy a new designation in this case. Are there PML's that would be interested in this loan as a nonrecourse loan as there is massive equity built in that would satisfy both Principal and Interest?

Originally posted by @Frank Portillo :

Typically, for an investment loan, the developer is not allowed to live in the asset. I do believe it is illegal for an HML to loan to an "End buyer"/owner occupant? Repositioning would be to change from an investor/developer to owner occupant and/or to modify the loan terms to satisfy a new designation in this case. Are there PML's that would be interested in this loan as a nonrecourse loan as there is massive equity built in that would satisfy both Principal and Interest?

The quick answer is no.  Just because a person or company is a PML, doesn't mean they will skirt RESPA and risk huge fines from the CMPB to treat a loan as non-recourse because there is lots of equity. 

Having said that, once the renovation is complete and the borrower has established residency, the new loan paying off the HML could be done as a conventional loan.