Owner/Occupied Fannie Mae

[Susan Maneck]

I am a relative newbie at buying real estate, having only two current properties but I set up a Solo401K so I could buy some more. As I was looking for investment property  I found a house I wanted to buy for myself. It is over 1700 square feet and it looked like some flipper might have lost it during the recession because it was already updated very nicely. It was only 29K and about three blocks from where I currently live. The house I live in is two-story and at my age I'm finding stairs increasingly difficult so this house was perfect for ME. I made a good bid as owner/occupier but my bid was rejected, not in favor of a better bid but because they considered me an investor despite my signing a document saying I intended to live there. They invited me to rebid in two weeks after the end of First Look. Can they do this? Do I have any legal recourse? Has this ever happened to anyone else. Are investors not allowed to buy owner/occupied houses if they truly intend to live in them? Incidentally, I expected to live in this house not one or two years, but 3-5 years until I retire. 

Fuming.