FHA seasoning, is my lender confused???

Question

Josh Engelhart · Answer

Purposefully committing mortgage fraud carries a max $1,000,000 fine and 30 years in jail. That being said, situations change. I'm not aware of a particular required occupancy time-frame from Fannie Mae itself. I do know that they, Freddie and HUD will only allow you to buy their foreclosed homes as owner occupants with defined time frames. In my experience timing wouldn't be the issue here. Why this new property would be considered a primary residence would come into question. Reasons it would make sense include being larger, closer to work, in a better school district, etc. If you are moving into a smaller living space further away from your job it is unlikely the lender will allow you to finance as an owner occupant. If you got transferred 3 states away for your job it probably wouldn't matter if you just bought a house 3 weeks ago. I have seen many deals fall apart or be countered in underwriting because of occupancy.

Andrew Postell · Answer

@John B. here's the specific wording of your loan agreement at least.  And exactly what Chris was mentioning, if you are planning on moving into the new home within 60 days then it might be possible to not violate the 12 month commitment.  Let us know how it goes.

Chris Mason · Answer

Oh, but to make things a little more nuanced, I might have the solution that I'd shoot for:

When you close on this purchase, you're going to promise to move in within sixty days.

That in theory gives you adequate time to fulfill your 12 month obligation on the last mortgage, and meet the 2 month deadline for the new one.

This would be a big huge fight with underwriting like it always is when I'm up to my "well, technically..." shenanigans, so allow an extra 12 days in escrow to have that fight. Heh.

Chris Mason · Answer

20% down on a fourplex (probably) tells me that you purchased it as a primary residence. Meaning that 10 months ago you (probably) promised to live there for 12 months, and you haven't upheld that promise yet.

Fannie wants 25% down on an owner occupied fourplex, Freddie wants 20%. Both require 25% down for an investment property fourplex. So you (probably) just did Freddie 20% as an owner occupant 10 months ago.

Do you have some extenuating circumstance that you could not possibly have foreseen, that would explain why you are two months short of upholding a promise you made at the closing table before a notary public?