Owner Occupied?

[Mike Boyd]

I know of no place where it is explained. I did a condo complex adjacent to Sonoma State University. Well over 50% of the owners are parents of college students who live in the units while the parents live elsewhere. I called FHA. They told me they consider it as family owned , IMMEDIATE FAMILY, and, as such, would be owner occupied. This was several years ago. The kid is a dependant, pays no rent, probably the parent pays the utilities and HOA fee. They will sell the unit when the kid finishes college. The kid has a position in the future chain of title whether his name is on it or not. I'm not advocating for or against how you mark it in the report.....just how FHA looks (or looked) at it. Only a court of law could make an iron clad opinion.

 

[Carol Ames]

This came up in a fraud class several years ago. In this class they stated that owner occupied means just that, not kids, parents, etc. just do the person or persons on the title occupy the property. One thing that was pointed out was typically the interest rate and the insurance rates are higher on non owner occupied properties which is why people were saying it was owner occupied when it was not.

FHA did rule several years ago that a condo development here could meet their guidelines for an owner occupied development since the typical owner of the home was the child buying the home for parents or the elderly parents had put it in the children's names. This did not change the occupancy status of the individual unit when it was being appraised, it just allowed the development to go FHA even though it was technically mostly non owner occupied.

 

[Mike Siegfried]

One thing that was pointed out was typically the interest rate and the insurance rates are higher on non owner occupied properties which is why people were saying it was owner occupied when it was not.

I have had this come up and the MB can usually get them close to an owner -occupied rate by calling it a second home. Avoids problems all around and we don't get yelled at for telling the truth.

Mike