Occupancy Determination (CHECK BOX)

[Smokey Bear]

Jeez, guys, haven't y'all figured out how to check more than one box????????????? And 'splain, of course.

 

[AnonApprsr]

Who's job is it to determine if it's a second home or owner occupied? Who's determination is used?

Sigh. Reading the seller guide they say:

A principal residence is a property that the borrower occupies as his or her primary residence.

I think the appraiser checks the box believed most appropriate and provides an explanation within the report. That way the information is being provided to the lender, no one is misled and the lender can decide how they want to proceed.

I did that, and the lender has decided that they would like to proceed with the Owner Occupied checkbox checked. Do I simply reply that the property was occupied as a tenant at the time, and based on the occupancy at that time, on the effective date, that tenant check box must be checked. Common sense brings up all the issues brought up here as to occupancy determined by appraiser.

 

[Peter LeQuire]

If eHow is correct, the property wouldn't be eligible as a second home if it's rented. "The property must not have any tenants or rental agreements....."

While knowing the citation in the Selling Guide might be helpful in your argument with the lender, it goes beyond simply reporting the occupancy of the property at the time of your inspection.

 

[BOCK FOLKEN]

That's what I did. They aren't happy. I'd like to at least be right, if they're going to be unhappy.

I'd say you did the right thing.

They have other options, they just wanted to ignore the facts and underwrite the thing as straight owner occupied...which they both knew right upfront was a stretch....with a better interest rate that was first promised to the borrower. You would have been compromised reporting it any other way.

Now they have egg on their face, both the owner and the lender, for asking you to look the other way

As an aside, had they waited until the tenant was gone, and the owner had met you at the house...would you have known to ask him if he ever rented out the house to "tenants"? I probably would not have thought twice about it and would have reported "owner occupied".

bock

 

[CANative]

B2-3-01, Occupancy Type Requirements (10/30/2009)
Introduction
This topic contains information on occupancy type requirements, including:
• Overview
• Principal Residence Properties
• Second Home Properties
• Investment Properties
• Mixed-Use Properties
Overview
Fannie Mae purchases or securitizes mortgages secured by properties that are principal residences, second homes, or investment properties. For the maximum allowable LTV/CLTV/HCLTV ratios and representative credit score requirements for each occupancy type, see the Eligibility Matrix.
Principal Residence Properties
A principal residence is a property that the borrower occupies as his or her primary residence.
The following table describes conditions under which Fannie Mae considers a residence to be a principal residence even though the borrower will not be occupying the property.
Borrower Types Requirements for Owner-Occupancy
Multiple borrowers Only one borrower needs to occupy and take title to the property, except as otherwise required for mortgages that have guarantors or co-signers. (See B2-1.2-04, Continuity of Obligation (05/27/2010).)

Parents wanting to provide housing for their physically handicapped or developmentally disabled adult child If the child is unable to work or does not have sufficient income to qualify for a mortgage on his or her own, the parent is considered the owner/occupant.
Children wanting to provide housing for elderly parents If the parent is unable to work or does not have sufficient income to qualify for a mortgage on his or her own, the child is considered the owner/occupant.

Note: If a property is used as a group home, and a natural-person individual occupies the property as a principal residence or as a second home, Fannie Mae’s terms and conditions for such occupancy status as provided will be applicable.
Second Home Properties
The table below provides the requirements for second home properties.
Second Home Requirements
Must be located a reasonable distance away from the borrower’s principal residence.
Must be occupied by the borrower for some portion of the year.
Is restricted to one-unit dwellings.
Must be suitable for year-round occupancy.
The borrower must have exclusive control over the property.
Must not be rental property or a timeshare arrangement.
Cannot be subject to any agreements that give a management firm control over the occupancy of the property.

Investment Properties
An investment property is owned but not occupied by the borrower. An LLPA applies to all mortgage loans secured by an investment property. These LLPAs are in addition to any other price adjustments that are otherwise applicable to the particular transaction. See the Loan-Level Price Adjustment (LLPA) Matrix and Adverse Market Delivery Charge (AMDC) Information.
For borrowers who are natural-person individuals, eligibility and pricing for group homes will be the same as currently provided under the terms and conditions established for investment, second home, or owner-occupied properties, depending on the particular occupancy status.
Mixed-Use Properties
Fannie Mae purchases or securitizes mortgages that are secured by properties that have a business use in addition to their residential use, such as a property with space set aside for a day care facility, a beauty or barber shop, a doctor’s office, a small neighborhood grocery or specialty store, etc.
The following special eligibility criteria must be met:
• The property must be a one-unit dwelling that the borrower occupies as a principal residence.
• The borrower must be both the owner and the operator of the business.
• The property must be primarily residential in nature.
See B4-1.3-04, Special Appraisal Considerations for Mixed-Use Properties (04/01/2009), for appraisal considerations for mixed-use properties.
Related Announcements
The table below provides references to the Announcements that have been issued that are related to this topic.
Announcements Issue Date
Announcement 09-32
October 30, 2009

 

[JRS at OBX]

I run into this with my of the properties I appraise. I mark it according to the status at the time of inspection. I typically inspect those properties in between renters on the turnover day when it is vacant. I mark the vacant box.

I typically put a statement in the addendum that goes something like this:

Occupancy: This report is marked as being vacant. This is not entirely correct, however, there was nobody occupying the subject during the time of inspection. The subject is fully furnished and ready to be occupied immediately. Access was gained through a rental company and the subject appears to be rented on a weekly basis during the tourist season which is typical for properties in this market which is considered to be a coastal resort area.

 

[Mr Rex]

Gee Ca, why didn't you highlight in red that it must not be a rental property?

 

[CANative]

Because it is not a rental property. It's the owners second home and he uses it when he wants to stay at the ocean and rents it part time when he's not there.

The selling and appraisal guide doesn't say which box should be checked. It merely states that the appraiser is to determine the occupancy.

 

[Mr Rex]

Maybe you should write to Fannie and tell her to add "Seasonal Rentals OK" in that section so it matches your interpretation of rental property.

 

[CANative]

The selling and appraisal guide doesn't say which box should be checked. It merely states that the appraiser is to determine the occupancy.

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