Is this Legal? - Posted by SteveC

Posted by JD on March 31, 2000 at 08:55:18:

What do you think? It is clear your intent is not to maintain the property as your primary residence, making representations to the lender otherwise would be fraud. I would want to make more than 6k if I had to mislead a lender.

Is this Legal? - Posted by SteveC

Posted by SteveC on March 31, 2000 at 08:42:30:

I did a post few weeks back ref my little niche that I have found in RE investing. To sum it up, Im purchasing RE using a agent who before the properties are found, find buyers first. The buyers for me usually have poor or bad credit or some sort of blemish that prevents them from obtaining a loan(nearly all of them so far can refi or buy from me in 6 mos to a year).Believe it or not, one of my current leasee has 10k to put towards a house and has been rejected by about 6 banks because he had a medical bankruptcy on his credit. My credit is near perfect, so so far i have had no problem in getting these loans. The seller pays most of the closing costs and any moneys needed come from my potential buyers. I also request 2k to 4k upfront from my buyers as I do lease\options on all of them. So far so good. Most of my profit come from the option money and any monies that is the difference between what I bought it for and what Im selling for. My role is to buy these properties under market somewhat so my buyers have a good buy and there is enough money to be made by me. Anyway my problem is this. Most of the loans I purchase are owner occuppied and not investment loans. Believe it or not I usually stay in the prop for one day then I lease it out(already established). Is the FRAUD? My insurance is the same until my leaesee move in then I switch it over to investment coverage. All of this seems to be moving ok and no problems so far but it all seems too easy. I made 6k recently and all I did was push paper. Also if your wondering, I screen my potential buyers as does my Realtor , if I dont feel comfortable about them, I dont help them. Any feedback would be appreciated. Thanks.

Re: Is this Legal? - Posted by PatrickMD

Posted by PatrickMD on March 31, 2000 at 14:53:21:

Steve, If it walks like a duck, and it quacks like a duck, then it’s a duck. We’ve all made mistakes in our lives. You’ve obviously got a conscience. God is smiling on you for that. Now, chalk it up to experience and go figure out a different angle that you (and the rulemakers) can live with. Pat.

Re: Is this Legal? - Posted by Tim (Atlanta)

Posted by Tim (Atlanta) on March 31, 2000 at 10:05:16:

At closing, did you sign something like an “owner occupant affadavid”? This states that you have intention to occupy this property as your primary residence. Since that is not your intention (demonstrated by living in these properties for 1 day), you have committed fraud. You may never be caught. You may be charged for a felony tomorrow. Sounds risky for a $6000 payoff.

How can you do more than one of these at a time? Are you telling the lender that you have all of these rental properties, and want to buy a primary residence? Wouldn’t those negatively affect your ability to purchase that next property? In the conventional mortgage market, I think it would.

Just my .02