We went to the 24th Street Theatre in Curtis Park over the weekend to see Country Joe McDonald perform a 100-year tribute to Woody Guthrie. Most people agree that Woody Guthrie was born on July 14, 1912. This would make July the 100th anniversary of his birth. Country Joe was born on January 1, 1942, so that makes him 70. Some of you may remember Country Joe and the Fish from Woodstock -- Give me an F . . .
Woody Guthrie was a legend in my house when I was growing up. He was still alive then, too. My mother played all of his records, and I knew all the words to This Land is Your Land. That should be our national homebuyer's anthem. They should play that song at a National Association of REALTORS convention. But they probably won't because Woody Guthrie was both revered and despised. He hated fascism, as does any rational person and, for some of his political beliefs, he was persecuted.
My mother was a radical. I say was because she died 10 years ago. Because of her political beliefs, we kids lived in fear that the FBI would show up on our doorstep. I remember buying her a robe one year for Christmas so she'd have something decent to put on in case she was hauled downtown unexpectedly in the middle of the night.
I think of this now because of buyers who have put themselves in a terrible situation. I hope they don't sleep in tattered PJs. These are super sweet people who are selling a short sale and, like many in their shoes, have a family member who is willing to buy them a new house. The problem is the financing. When a family member is financing a home in which that person will not live, that makes that family member a non-owner occupant -- and they are treated like an investor.
Owner-occupant is an important term in mortgage financing. A borrower is one of two things: an owner occupant or a non-owner occupant. If a borrower is an owner occupant, a person who intends to live in the property -- meaning to move in, haul over all of their books, clothing, pots-and-pans, half-dead cats and blind dogs; park the old jalopy in the garage, change the address on their driver's license, put the utilities into their name and all of the other actions generally taken by a person who lives in the home -- then that person is offered more lenient financing terms than a person who does not live in the home.
It means that an owner occupant can put down anywhere from 3% of the purchase price to 5% of the purchase price, depending on the type of loan. The interest rate is generally less as well. There is a huge incentive to be an owner occupant over, say, an investor. Huge enough that some people will lie about it.
If a person lies on a loan application, that person is committing mortgage fraud. Mortgage fraud is punishable by the FBI. Buyers told their real estate agent that their sister was buying a home for them, and she did not intend to live in the property. However, she was obtaining an owner-financed loan. Plus, she plans to make an offer on a HomePath home. That's a home owned by Fannie Mae, which makes the situation even more volatile.
That's because Fannie Mae makes real estate estate agents promise in writing not once but twice that there is no mortgage fraud. Not to mention, borrowers, too, must comply. The thing is these buyers will probably find some desperate agent willing to put her or his license at risk. And they are willing to take the chance that they'll get kicked out of their home by the FBI. Their sister could go to jail and be fined half a million dollars.
Our depressed economy seems to be bringing out the worst in people instead of the best. The kind who don't care or consider repercussions. It's every dog for himself. Woody Guthrie's message of blatant honesty and impeccable integrity seems to be lost or misplaced in today's society. That's a crying shame.
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Certified HAFA Specialist
My Sacramento Real Estate Listings
Elizabeth Weintraub is an author, home buying columnist for The New York Times-owned About.com, a Land Park resident, and a Land Park real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout the four-county Sacramento area. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you. Broker-Associate at Lyon Real Estate. DRE License # 00697006.
The Short Sale Savior, by Elizabeth Weintraub, available at Amazon.com.
Lyon Real Estate is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.
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The views expressed herein are Weintraub's personal views and do not reflect the views of Lyon Real Estate.
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