Strange issue with seller

[Andrew Bertram]

I am new to investing and interested in a property in my area.  It is a foreclosed townhome with considerable need for improvement.  It is in a nice neighborhood where homes similar in square footage and beds/baths rent for around 1400/ month and are selling for 155k-190k.  It is listed at 74,900 by the bank because of considerable mold damage.  But even with basically gutting most of the house and rebuilding it would represent a positive cash flow.  The strange part is this: the seller (a bank) will only allow it to be purchased by someone intending to use the home as their primary residence.  They require you to sign an owner occupancy affidavit saying just that.  Has anyone heard of this before and do you know of any ways this could be circumvented?  A full cash offer on the home was rejected by the seller.

[Jay Hinrichs]

@Michael R.

  Nope and you actually cleaned it up... I just reinforced it... as these rules have major teeth in them and it should be noted for all the newbie wanna bees on BP... don't want to end up in the slammer by defrauding Uncle  !!