Even with all the regulations and changes in the mortgage industry since 2008, fraud still exists. This blog most specifically deals with borrower fraud and what is being termed as reverse occupancy fraud.
Borrowers will use rental income to qualify for a mortgage loan but then occupy the property instead of renting it out. The agencies, Freddie Mac and Fannie Mae, have seen an increase in use of short term rental income, i.e. Airbnb and VBRO. Borrowers will try to use this income to qualify but have no intention of putting their home in a rental pool.
Because this has become such a problem, Freddie Mac has recently updated their guidelines that state:
ncome from rental properties not owned in the prior calendar year For Borrowers who do not have a documented one-year history of investment property management experience, the Seller may only consider net rental income in an amount up to 30% of the sum of the net rental income and all other stable monthly income that is used to qualify the Borrower. This change provides support to sustainable and successful homeownership by requiring a reasonable limitation upon the reliance on a newer type of income stream. Guide impact: Section 5306.1(c)(ii)
I found an interesting calculator that will tell a potential borrower if it is cheaper overall to rent or to purchase a home. The calculator will allow the user to input specifics such as monthly rental costs and tax bracket information. The results show if buying or renting is the best option. www.calculator.net/rent-vs-buy-calculator.html
.I came across information about this program in a recent blog post. HUD has offered this program for a while but I didn't realize it was still an option. The program provides certain incentives (subject to meeting criteria) to firefighters, law enforcement officers, emergency medical technicians, and teachers.
Here is a link that further explains the program.
FHA owns homes throughout the country. Find out what properties are in your neighborhood via the Hud Home Store.
Freddie Mac's Home Possible mortgage option.