Occupancy Marked?

[Couch Potato]

Don't change the occupancy. If the owner was occupying the home it's primary. If the lender wants a 1007 and 216 for what it will be then that's their prerogative. Yours is to report the subject as it is.

Very well said.

 

[c w d]

The owner was occupying the property, but it's not owner occupied? I guess he provided them evidence of the owner paying himself rent. I'm glad I'm crazy or this sh!#, err stuff, would drive me to insanity.:Eyecrazy:

Maybe he incorporated himself and the rental is part of his allotted expenses.

 

[Mztk1]

So when I do a new construction spec home sale and the house is vacant I have to find out who is planning on living there the owner or a tenant and I am not to mark vacant?

Here come the calls from the underwriter. "I see you marked owner occupied but there is no furniture in the house."

It is what it is as of the effective date, and the subject was owner occupied. I would not dream of marking tenant with an "X" or an "*". Write a letter, tops, but I wouldn't change it nor would I do it differently the next time.

 

[Marcia Langley]

The page one occupancy box is always marked as of the effective date. No wiggle room. If it is occupied by the current owner of record, that's what you report.

The bank does not need you to violate that requirement just so it will match up whith something else.

The FBI reports occupancy fraud among the top four fraud items.

 

[RSW]

Owner occupied at the time you visited the subject = Owner occupied on the appraisal.

 

[KD247]

The page one occupancy box is always marked as of the effective date. No wiggle room. ...

There are many reasonable appraisers who would argue that the occupancy box should reflect the loan type, as per the assignment's scope of work, provided that the result does not mislead the reader. Personally, I think it's just another part of the form that wasn't well thought out.

I've always gone with the common-sense designation and, if necessary, an explanation. Something like, "Per the client, subject to be tenant occupied upon completion of construction." or "Owner occupied per Client, but identity of occupants not verified." In this case, I'd be very reluctant to categorize this property in transition as owner-occupied, knowing that the borrower did not intend to occupy the property, because that could potentially mislead a reader of the report.

 

[Bama Bayou]

The owner was occupying the property, but it's not owner occupied? I guess he provided them evidence of the owner paying himself rent. I'm glad I'm crazy or this sh!#, err stuff, would drive me to insanity.:Eyecrazy:

I actually run into this all the time with resort properties. The owner will be there when I do the inspection, so I check it owner occupied, then I will get a call to change it to tenant because they intend to use it as a second home during the spring and fall, rent it long term to snow birds in the winter, and rent it weekly during the summer.

I check whatever they want and explain it. A check box does not trump a bit of narrative for me.

 

[KD247]

Just thinking out loud, occupancy isn't a physical characteristic of the property and can't even be reliably gauged by noting who happens to be at home during the inspection. (I've had my share of "owner-occupants" who don't look anything like the people in the family photos on the hearth.)

Occupancy can only really be determined with full knowledge of contractual obligations and current practice, and can be nebulous and change at a moment's notice.

The tangible implications of "occupancy" mostly pertain to the requirements of the loan program, so I would say that our most important duty is to inform the lender of any observations that might conflict with information that they are relying upon. Arguing over whether a house under construction is "vacant" or "owner-occupied" is interesting, but the real-life ramifications usually have more to do with whether an "owner-occupied" house is actually being rented or whether an "owner-occupied" house is actually vacant and unlivable. In this case, knowing that the buyer intends to rent the property but marking "owner-occupied" could facilitate the buyer improperly qualifying for a superior loan program. (Or, I suppose vice-versa if the borrower is going to claim rental income but actually inhabit the house themselves. In any case, the check box can be misinterpreted and there's no substitute for clear comments.)

 

[c w d]

There are many reasonable appraisers who would argue that the occupancy box should reflect the loan type, as per the assignment's scope of work, provided that the result does not mislead the reader. Personally, I think it's just another part of the form that wasn't well thought out.

How is that so? The investor wants to know if the home is primary, tenant occupied or vacant. Each has a certain amount of risk, more or less, to loan money on.

When we start checking that box according to the client and not the occupant then we are mis-representing the home and the investor (FNMA) is unable to adequately assess their risk.

 

[Carnivore]

How is that so? The investor wants to know if the home is primary, tenant occupied or vacant. Each has a certain amount of risk, more or less, to loan money on.

When we start checking that box according to the client and not the occupant then we are mis-representing the home and the investor (FNMA) is unable to adequately assess their risk.

Let the lender warrant the occupancy at the time of Loan application by requireing the borrower to sign a affidavit! Then provide a copy of this to the appraiser. Put the risk where it belongs.

End of problem!