We get a lot of questions from investors looking at Bank Owned Properties.  There is a lot of confusion around the owner occupancy rules surrounding many FNMA and FHLMC owner occupancy requirements.It's not uncommon for the bank to restrict offers to owner-occupied buyers in the first one to two weeks of the initial listing.  Undoubtedly this is because they usually net more money from an owner occupied buyer than they do an investor.  On many properties, they've made considerable investments in carpet, paint and sometimes appliances to make the property more appealing to owner occupied buyers."Can't I just SAY I'm going to be an owner occupied buyer, and then not occupy?

"Well, the answer is, yes... you can say and do whatever you want, but there are some things you need to know.

1. You have to sign an addendum stating that you are going to occupy the property within 60 days and reside there as your primary residence for at least one calendar year, OR pay a penalty of $10,000 (or something very similar, see example contract.)

2. They will check.  We've been hearing more and more about banks doing occupancy checks after closing.  With $10,000 on the line, it could be a great way for them to recoup lost revenues.

3. Your agent has to sign.  Your agent signs certifying that they don't know anything about the occupancy being false or misleading that they are encouraged to notify FNMA.

At the end of the day we strongly encourage you to abide by the owner occupancy requirements on the transaction, there are serious consequences.

What do you think?

Comment below and let us know what you think about Fannie and Freddie's owner occupancy requirements.