Cheating the FHA Owner Occupied Clause

[Jimmy H.]

Warning: I am about to pose a question about something that is not legal.

If you have never broken a rule in your life and your level of personal morality cannot handle that please look away, and this is not meant to offend anyone, nor is it meant to suggest anyone do anything illegal. I am not intending to solicit any hate mail with this one - just posing an innocent question

Have you ever heard of anyone using secondary government financing for owner occupants to get a great rate, terms, low down payment, etc. but not really move into the home and instead use it as a rental.

I have a friend whose income and situation would allow him to get a great FHA loan with around 3% down, etc, etc. and this guy has talked about buying a SFR or 1-4 and renting it out. He speculated that if he put his name on the utility bills, it would appear as OO to the feds, but then he could rent it out utilities included.

Thoughts? (I can hear the sirens getting louder)

[Eric M.]

I think the chances of getting away with this 4 years ago was about 100%. Everyone was doing it. No one seemed to care.

Now they care.