Everyone Is Hurt By Loan Fraud, Especially Innocent Homeowners. I only originate mortgages in Connecticut, but it is not unusual for me to get e-mails and phone calls from homeowners in other States as a result of my blogs on ActiveRain. A while back I got a call from a homeowner in California who has an FHA Mortgage he and his wife had recently Closed on. The issue was when they applied for the mortgage the intent was for them to live in the home for a very long time, so the loan was originated as an Owner Occupied Mortgage. However, little did they know their plans would quickly change. By quickly I mean in less than a month after they closed on the property.
Less than a month from closing on their new home, his company offered him a position in a different location for more money. Even though they had just moved into their new home, this was an offer he and his wife felt they could not turn down. They did not want to put the house back on the market for sale, because the company wanted him to relocate very quickly. So they contacted their Lender, a major bank, and explained the circumstances. They inquired if it would be possible to rent the property since he would be taking the other position and relocating. The customer service representative told them they needed to submit a formal request to the bank in order for a determination to be made.
A little over a month later they received a denial from the Lender to their request. The response was puzzling to them, which caused them to go on the Internet and start Googling for more information on FHA Mortgages. I have written a number of ActiveRain blogs on FHA Mortgages, so my name not only came up quickly, but it also came up often. I picked up the phone when they called and they explained the whole situation to me. Unfortunately I had to reaffirm what the bank told them.
FHA is only an Owner Occupied Mortgage, can't purchase the home today and then turn around tomorrow and use it as an investment property. These people were not trying to hide what they were doing, something unexpected happened causing their situation to change. But because the Occupancy Fraud is the second major form of Loan Fraud committed today, the bank and FHA are going to be very suspicious this was not their intent from the beginning. Also even though he had a formal letter from the employer with the job offer, which was dated after the Closing on the property, the transfer would be voluntary, so he did have a choice.
Had the offer from the employer been a year later, no problem, a request would not even of had been needed to be made. After a year they could do whatever they want with the property, maybe even as early as six months, but not in less than a month. They were caught between what is referred to as "a rock and a hard place".
Regardless of what these homeowners say, or documents they produce, it is very unlikely the Lender was going to believe they did not have knowledge prior to the Closing he would be receiving this job offer, and choose to not notify them to change the loan from an Owner Occupied Loan to an Investment Loan. To the Lender this was an attempt at occupancy fraud, and trying to obtain a mortgage as Owner Occupied, when in reality the Borrowers intended it to be an investment property.
These homeowners seemed like honest people to me, but unfortunately for them they are being penalized because of those who are not honest and committed Loan Fraud in the past. When it comes to loan fraud Everyone Is Hurt By Loan Fraud, Especially Innocent Homeowners like these people.
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Info about the author:
George Souto NMLS# 65149 is a Loan Originator who can assist you with all your #FHA, #CHFA, and #Conventional #mortgage needs in Connecticut. George resides in Middlesex County which includes #Middletown, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum, #Haddam, #East Haddam, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com
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