BUYING A DUPLEX WITH INTENTIONS OF OWNER OCCUPY LOAN

[Kyle Murray]

I am wondering if I were to buy a duplex with a conventional "owner occupy 1-4 family" loan, and I do not end up moving in but instead I rent the unit out, what would the ramifications be if any?

Can they call the loan?

Thank you in advance,

Kyle Murray

[Frank Chin]

Yes, if they find out, they can call the loan. Usually OO loan requires you to live there at least 2 years, at least, that's the mortgages I got.

I don't know how they check. But one co-worker told me that someone came to their home once, and turned out they're checking for the bank who lives there. The guy was checking the mailboxes. Whether it's a common thing or not I don't know. My next door neighbor is a state auditor for the NY state tax department. His job is to find out who claims to live out of state but actually lives here in NY where taxes are higher, and people don't pay the taxes. He says he get tips from a hot-line and then checks where the person goes to use the ATM, shopping etc. via bank and credit card records.

I also heard of cases where unfriendly neighbors actually turn you in to the bank for getting the wrong type of loan. In one case, the tenants the landlord rented to apparently has a food truck, gets up early every day and makes a racket. It was also smelly. They checked into who owns the place, has a mortgage, a find out it's a OO loan, and the owner doesn't even live there. Bad tenants usually gets absentee landlords in trouble, and I guess enough absentee landlords do this, get OO loans, so that's the first thing people check on. The owner was on some real estate forum asking what he should do. People advised him to move to the smelly apartment neighbors were complaining about.