What is the penalty for flipping a foreclosure you said you would occupy?

**Duc1198** · 01-27-2011, 02:18 PM

Lets say an individual wants to flip a house. Paying cash for a fanne Mae foreclosure and signing owner occupant affidavit so he beats the big investors. Few months later he decides he wants to sell it. What do they do if they find out. Is it typical for them to check?

**Thesa** · 01-30-2011, 12:06 AM

the answer is on the fannie mae addendum for owner occupied - if it is a flip - how long will the flip take - that answer will be needed to answer your question - HUD, Fannie and Freddie all have different guidelines - your buyer is cash - so the loan is not the issue - it all comes down to what that contact says

**flash.investing** · 02-15-2011, 09:59 PM

Misrepresenting occupancy intention has been a common practice by many "investors" using mortgage loans from banks to fund their flips. I really wouldn't lose any sleep over a one-time deal as long as the property does not go into foreclosure under YOUR name. That's when you can get into federal fraud investigations. Rarely will any agency waste precious man hours on one property.

**landontreber** · 02-16-2011, 03:01 PM

Wouldn't the most relevant question be; "Why even risk it in the first place?" All it takes is you to be that one person who they want to make an example of. Granted, you will be paying cash so there is no fraud with a new bank, but remember that fannie mae is involved on the sell side. If they have you sign the form, they would probably be willing to pursue it through an Attorney General if it is common practice in the area. Also, they are now including deed restrictions on many of the properties they sell to stop someone from selling the property right away, or even further encumbering it beyond the purchase price

**First Time Home Buyers** · 02-18-2011, 09:15 AM

It's fraud, and if you want to know the penalties you should probably consult a lawyer, since it's a legal matter.

Under a Freddie Mac Affidavit, it says the seller could have the right to cancel the sale possibly.

To me, that means they could make the sale to you null and void if they found out you did not occupy it for the time stipulated in the contract.

Again, best to consult a lawyer.