All Forum Posts by: Bill Rich

Bottomline is FHA does do door knock audits to confirm you a re living in the home and if you aren't they will call the loan immediately. Like Ryan said your playing with a flaming tank of gasoline

Phillip loving a home is not a good reason with FHA. It needs to make sense. Work relocation, increase in family size etc.

Here's the biggest thing you need to realize, setting aside the mortgage fraud part of the equation. Underwriting will ask for a motivation going from a single family home to a multi family since that is considered a downward move and your motivation is what? Being an investor? I dont know a DE UW around who wouldn't sniff this out before it ever remotely gets to closing. 

For the record you cannot be the realtor and wholesaler on a 203K transaction for it would be an Identity of Interest.

Hi Jon

The Home Path mortgage program was disolved by Fannie Mae several years ago. Your probably just coming across archived information on the web talking about the Home Path program. There was indeed a HP renovation program as well. Just one minor detail on the FHA 203K, the streamline actually no longer exists. It was replaced by the Limited 203k. Both have pretty much the same guidelines but there were some minor revisions made to the FHA guidelines when FHA did away with the streamline 203k. Both the FHA 203K and HomeStyle are great programs and if you would like to review them in more detail feel free to reach out to me for I specialize in these loans.

@Blake 

Congrats on taking the next steps into investing on RE. If I was starting off I would do it the exact same way you are, looking into multi family homes and let your investment pay you. As has been mentioned both the 203k and HomeStyle are renovation loans. That would help you accomplish the goal of buying/rehabbing essentially any property. I am a national lender who specializes in these loans and would be happy to provide any insight on the mot efficient way to get your property to settlement. 

Best of luck!!!

Ahhh I know that feeling!! lol 

@Jerry Padilla just wanted to give you a heads up that you actually can do a 203K even if the borrower hasn't occupied the home. It would need to be documented that the home was not habitable (through the HUD consultant's SOR or appraisal). I have done a few in this scenario. Also, with it being a 2 unit made reference to it possibly being an investment property and doing a HomeStyle. Fannie Mae doesn't allow HomeStyles on a NOO multi-family home. Just wanted to give you a heads up.

@Chase Harmon Congrats on your recent purchase!  You can do either renovation loan as a refinance not just a purchase. I specialize in both loans and can provide answers to any questions you have.  The 203K and HomeStyle are 1st mortgages not a 2nd mortgage so that means if you have a mortgage on the property it would be paid off through the new loan and then the additional funds are provided for the rehab.  I have a pdf that walks you through the steps of the loan process that is extremely helpful.  If you would like I can send you a copy. To address.  I am here to help!  

Caleb is 100% correct. If you are buying the property and not intending to live in the property its fraud. Once repairs are completed you are required to live in the home. If FHA comes out after the final inspection has been completed the renovation has been closed and they find no evidence of you occupying the home they will investigate further and could and would most likely call the loan immediately. I have seen it happen first hand. Sure you can roll the dice and see if you can get away and I am sure there have been people who have. It is a big risk though.

Neither program is designed as a flip program, both FHA and Fannie Mae acknowledge that. Yes you can certainly take the approach to flip the property and could have no issues . BUT there is also the risk of getting caught, especially if tying to pass the properties as owner occupied.

@Christian

To answer your question, lenders are required to hold loans on their books for a period of time for at least 6 months.  It is an internal requirement, not something the consumer would see as a prepayment penalty for they are not allowed.  If the loan were to be paid off either through a refinance or being sold the lender has to pay a penalty to their investor.  I will emphasize it is not a penalty that you the consumer would pay at all.  That said, if the loan is paid off early, we as the lender pay a penalty for not having that loan open for the required period of time.  Hence the reason the 203k and HomeStyle are not a program designed for flipping.  If you tell a lender you are intending to flip the property most probably would not do the loan for the above mentioned reason.  That is why there are programs specifically designed for flipping "fix and flip financing".  These loans are designed to be paid off as soon as possible. 

I have been origination both renovation, construction, flip and regular mortgages for over a decade and can address any questions you have.