Posted by Glenn OH on February 03, 2000 at 21:21:52:
I believe this was a bluff. My memory of Garn -St. Germaine is that an owner has the right to lease for less than three years. Thus, the buyer paid all those closing costs for FUD (fear, uncertainty, and doubt).
The DOS police scared the HECK out of the buyers and threatened the seller who has an assumable mortgage! - Posted by Marcus
Posted by Marcus on February 03, 2000 at 21:01:26:
The seller had a property for a number of years with an assumable mortgage. They tried to sell it to the tenant on an assumption. The tenant, presumably, blew the whole deal because they told the lender that they had lived there all these years, and the seller had not. The lender refused to do the assumption claiming that this mortgage was to be owner occupied and not rented and that the seller violated the terms of the mortgage so it was not assumable. If you do this, which I don’t recommend, don’t let the tenant speak to the lender without being there. a word to the wise. the buyer got a new mortgage, from somebody else, the old mortgage was paid off, and even though this is not a fairy tale, everybody lived happily everafter.
They called the wrong police - Posted by Rob FL
Posted by Rob FL on February 04, 2000 at 08:07:46:
These are two different potential violations. Almost any government-backed loan (i.e. FHA,VA,FNMA/FHLMC,etc.) that requires less than a 20% down payment will have a clause in it requiring owner-occupancy for a given amount of time (usually 1 or 2 years). I have never heard of a mortgage that required owner occupancy for longer than that.
For instance, my first property I ever bought was a duplex. I used an FHA loan with 3% down. The mortgage had a clause stating that it must be owner occupied for at least 12 months after the loan origination date. Well after 7 years I finally moved out last summer and now the place is strictly a rental property. In addition, this mortgage has a DOS clause in it (actually it is assumable with qualifying). But these are 2 completely different mortgage clauses.
When all else fails read the documents. You might be surprised what they actually say.