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#1843342 - 08/16/13 07:37 PM Purchase for future use as primary residence?
Likes to Comply Offline
Diamond Poster
Joined: Nov 2008
Posts: 1,065
In the mountains
A customer applied to purchase OREO property here at the bank that has a building that appears to be a 1-4. There is no water or septic. The building only has stud walls. The building was previously used for storage. The customer put purpose as purchase property and install well and septic. The LO put on the credit write-up that the customer wanted to purchase for future use as a primary residence. The loan amount applied for $30,000. The building is uninhabitable and would take an extensive amount of money to make inhabitable. The OREO officer submitted a memo stating that the buildings use is only appropriate for storage at this time. The app was declined. Would you report as a purchase of a 1-4 even though we know it isn't a 1-4 as of now and the customer was not borrowing enough to covert it?
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#1843505 - 08/19/13 01:23 PM Re: Purchase for future use as primary residence? Likes to Comply
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,018
Bloomington, IN
The LO put on the credit write-up that the customer wanted to purchase for future use as a primary residence.

How do you refute the applicant's intention regardless of the property's current condition?

He could very well have been planning to make future improvements with out of pocket money, Loews credit, Menard's credit, Home Depot credit, loan from another FI, etc.
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#1861489 - 10/15/13 05:52 PM Re: Purchase for future use as primary residence? Likes to Comply
Colorado Girl Offline
Member
Joined: Mar 2013
Posts: 67
Because it's intention was to purchase for future use as a primary residence, how would the occupancy be reported? It is apparent there is another primary currently...

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#1861559 - 10/15/13 07:10 PM Re: Purchase for future use as primary residence? Likes to Comply
Rendar, CRCM Offline
Junior Member
Joined: Aug 2012
Posts: 38
Indiana
I believe the Getting it Right guide says you can rely on the stated intentions of the borrower as to their intended use of the proceeds. Because the customer indicated that they wanted to turn this building into their primary residence, I would report this as a purchase of a primary residence, just like any other purchase transaction where the borrower currently has a primary but is moving into the house being purchased...
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#1861991 - 10/16/13 07:15 PM Re: Purchase for future use as primary residence? Likes to Comply
Colorado Girl Offline
Member
Joined: Mar 2013
Posts: 67
Thanks for your time! I appreciate it!

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