I very much enjoy your weekly radio show. My son purchased a HUD home last October, and now he has an offer for a job located four hours away. Do you have any advice or direction in your books or e-books that would answer this question: What can he do to be able to sell the HUD home prior to the 12-month owner occupant requirement of HUD?
The HUD-9548-D form he signed does indicate that he has to occupy the home for 12 months, but it does not indicate that it has to be the first 12 months after closing. I realize, however, that is most likely what it means.
The purpose of HUD-9548-D is to make sure that the property is sold to an owner occupant rather than to an investor. In addition, the Department of Housing and Urban Development wants to monitor whether a buyer intends to use a home as his or her principal residence. If you purchase a home as an investor, the loan terms should be different than if you purchase it for your own use. An investor should pay a higher interest rate and will need to put down a higher down payment.
Typically, HUD homes (which are FHA foreclosures) are offered first to owner occupants. In this window, which is typically 14 days, owner occupants can make an offer on properties that are just listed without having to compete against real estate investors, who may be making an all-cash offer.
By competing against only those owners who will occupy the home, HUD levels the playing field. It’s in HUD’s interest to sell these foreclosures to owners who will live in them and care for them. It helps improve the housing stock and helps neighborhoods recover faster from the foreclosure process.
By signing the document, your son pledged to live in the home as an owner occupant for 12 months. If he tried to rent out the property, it could cause a problem for him if anyone came looking. But if he moves to take a job four hours away, that takes him well over 50 miles away, which is well established as the threshold of a hardship case.
In short, we think if HUD came calling, showing that your son had to sell in order to take a new job more than 50 miles from the house will quell any suspicions that he was only pretending to be an owner occupant when he bought the house.
You can call your local HUD office and talk to a HUD-certified housing counselor to answer any additional questions about this.
Good luck, and thanks for listening to the show.
Ilyce R. Glink ’s latest book is “Buy, Close, Move In!” Samuel J. Tamkin is a Chicago-based real estate lawyer. If you have questions, you can call Glink’s radio show (800-972-8255) any Sunday from 11 a.m. to 1 p.m. Contact Glink and Tamkin through the Web site www.thinkglink.com.