Property used as commercial B&B. Can new owners get resi mrtg?

[Patrick Diamond]

Hello BP:

I have an interesting situation.

8 years ago, a residential property was purchased by my client and converted to a bed & breakfast and has been functioning as one since.

Client now wants to sell, and, due to the fact that good records weren't maintained, it's being sold/marketed as a residential property.

Someone I work with in REI with quite a bit of mortgage lending background with underwriters advised me that whoever buys the home will likely have a very difficult time getting the deal done with a conventional mortgage, because during the due dilligence phase, the lender will find that the property has been running as a bed and breakfast, and therefore will shy away from it... even if the stated intention is to use it as a primary residence.

Can anyone with background on how the risk factors of these deals are considered and underwritten, or knowledge of common underwriting practices shed some light on this?

I appreciate your time in advance!