Legal ramifications of buying during/after refinance of a primary residence

**manatbay** · 04-23-2011, 02:52 PM

My family is currently undergoing a refinance on our primary residence simply for a better rate and savings, we verbally told the bank it's intended to be a loan refi for our primary home, but we recently had a friend list their home which we've been drueling over for years and it's affordable and advantageous for us to buy a second home and rent our first...
Is this Illegal?
What are the proper steps here?
Can the bank come after us or do they even care?
I'm afraid if I contact them they will stop the refi which is NOT what I want, we need that savings to buy the new home. Our first home is in Washington and the new home would be in Idaho if that matters.

**manatbay** · 04-23-2011, 11:38 PM

I believe my loan is FHA, it has PMI and is Freddie MAC backed... this won't change in the Refi because I'm LTV 112%, this is the origination of the problem. Any suggestions would help.

**Greg** · 04-24-2011, 07:50 AM

If you go through with the refi knowing you will not be living in the house then you are committing loan fraud. They are looking real hard for loan fraud these days.

**manatbay** · 04-24-2011, 09:11 AM

If by knowing you mean it's a possibility then yes, but there's just as strong a possibility we will not. What are the things they're tracking?

**manatbay** · 04-26-2011, 07:13 AM

I guess the question is how does one prove intent? If my work required me to move in 6 months, my intent was not to do so. If I lose my job and need to relocate that was not my intent... Of course if I refinance knowing these things will happen then that argument could be made, but if these things are 50%/50% and out of my control in general how is my intent measured against what actually happens?