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FHA Suspends its 90 Day Seasoning Requirement for Flipping!

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May 1, 2003 HUD imposed a 90 Day Title Seasoning requirement for all new FHA loans. This was their big idea to help protect the consumers from the Big Bad Flippers. It only took 6 years and a housing market crash to show the elitists the errors of their ways. Now they need our help to fix their mess.

They finally came to their senses and temporarily suspended title 24 CFR §203.37a(b)(2), which is the 90 Day Title Seasoning Requirement. This is only a temporary suspension. Starting February 1, 2010 and expiring on 1/31/2011, First time Home Buyers who apply for an FHA loan will not have the 90 Day Title Seasoning Requirement. However, we as investors will still need to follow a few guidelines in order to Resell (Flip) our Short Sales / REO’s and Flips to First Time Home Buyers who are applying for an FHA loan.

See HUD’s Press Release: http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories
/2010/HUDNo.10-011

Guidelines Investors Must Follow:
(read FHA ’s official release for all the details at: http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf)

  1. All Transactions must be Arms-Length.
    1. The Seller Holds Title.
    2. bLLC’s corporations or trusts that are servicing as the sellers were established and are operated in accordance with applicable state and federal laws.
    3. No pattern of previous flipping activity exists for the subject property within a 12 month period.
    4. The Property was Marketed openly and fairly.
      1. Assignment of Contracts may be Red Flagged.
  2. In cases which the sales price is 20% or more over and above the seller’s acquisition cost, the waiver will only apply if the lender:
    1. Justify increased Value
      1. My require a second appraisal
      2. Proof of work performed
    2. Independent Property Inspection
  3. 3. The waiver is limited to forward mortgages, and does not apply to Home Equity Conversion Mortgages (HECM) for Purchase Program.

This is a HUGE change and it will make it ten times easier for investors to resell Short Sales and Rehabs without having to find buyers who can qualify for conventional financing. FHA is the #1 lender to first time home buyers and let’s face it, our resell market is the first time homebuyers. It has just been difficult for us to resell to first time homebuyers over the last several years because of the title seasoning rules. The lenders who did not have those title seasoning rules had such lending requirements, primarily the down payments, that eliminated about 75% of the first time homebuyers from buying from us, unless we held onto the properties for so long that our holding cost eat up most of our profits and we risked those vacant properties becoming vandalized before the title seasoning time frames had passed.

For now anyways, we can get back to what we do best, fix either financial problems or structural problems in a timely manner and resell those properties for a profit. Everyone wins this way. The banks will have less foreclosures, the sellers will be able to get out of their problems, properties that need extensive work can be bought the traditional way and the biggest winner of all will be the first time home buyers who need FHA financing will now be able to buy completely renovated properties that will last for many years before they need maintenance or repairs again and the economy, especially the housing markets will start to see a recovery.



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real estate Miami7/30/2011

audreyross18@yahoo.comEarlier this year FHA made the headlines by publishing that they'll waive their anti flipping rule by another year and this was signed on January 15, 2011. Mortgage still have a 90 day title seasoning requirement.

home staging toronto4/19/2011

noregem@gmail.comThis sure is a cool way of showing the inner turmoil as this is how you end up in disastrous situations.

Bail Bonds11/15/2010

support@bailbondsprocess.orgGood Point Mike

regcure11/5/2010

jlfarley49@gmail.comBoy, flipping houses worked out real well

registry cleaner reviews10/31/2010

info@pc-registrycleaner.comgreat way to flip houses LOL

Orange County Peter10/26/2010

Peter@OrangeCountyRealEstateCentral.comGreat post and really useful for investor purchases, it took the market crash to get there but at least things are back on the right track and the right people that put the consumer first are still around. Useful article!

Arizona Investment Guy10/20/2010

jasoncarcher@hotmail.comIt was great to see this happen earlier this year. It has truly added to our business and allowed us to operate much smoother. Thanks for the great article!

Dennis Kuchenmeister10/12/2010

denniskuchenmeister@edinarealty.comIt's great that the 90-day seasoning rule has been suspended, HOWEVER, it's unfortunate that it's nearly impossible to find a lender with investors who will honor it. Lenders' internal underwriting requirements are still imposing 90+ days of seasoning AND requiring 2 appraisals, renovation receipts, an independent inspection, etc, etc... If anyone knows of local lenders in the Twin Cities area, please contact me via the link below (my name) or POST THEM -- we can send them LOTS of business!

Tom Taylor10/6/2010

tomtaylor47@gmail.comThe original intent of the legislation like many laws gets muddled in the details and application. Preventing rapid flipping is desirable, where no value is added to the property. However, when the property is improved before resale the owner should be excluded from this 90 Day Title Seasoning requirement.

Kevin the 203k loan guy9/28/2010

kwaltonucf@yahoo.comGood news indeed. Now many of the banged up properties won't sit for so long. With BofA's shadow inventory looming and the lenders getting more aggressive with foreclosing on borrowers now FHA may become an even more popular loan option for consumers.

business plan writer9/4/2010

micheal.walmort@gmail.comI must say that its nice work done by FHA . I appreciate you for this work.

Jamie Isherwood9/4/2010

jamieisherwood@gmail.comThis is awesome news. I will now have an opportunity to... hopefully take advantage of the new FHA guidelines. I truly believe that the mortgage industry needs to be closely looked at. I like the notion of having the mortgage paid down monthly not just the interest. Its about time.

john@cabinbedding.com9/1/2010

john@cabinbedding.comWell it's about time! Those house flippers have wreaked havoc all accross the country and now they need to help clean up the mess!

Dave8/31/2010

admin@madaboutabs.comMuch as flippers can spoil the real estate market, their cash injection into the market is also much needed to increase the velocity of money, which will help bolster the GDP.

Finance News8/23/2010

blogwaala@gmail.com Let's hope it helps the housing sector to recover www.top-insurance-network.com

Cobblestone Title - Florida Title Company8/18/2010

oniek@cobblestonetitle.comFinally they came to their senses. Hopefully this will help the market bounce back. Maybe they will realize their mistake and make it permanent. Wouldn't that be nice? If you need a Florida Short Sale Specialist, check us out at http://www.cobblestonetitle.com.

Kenny Rushing the Bulk REO Trader8/18/2010

bulkreotrader@yahoo.comTo the comment left just before mine . . . I love that quote! I believe that flipping houses is going to be the one thing Americans can do to help turn the economy around. As the government tries to stop this it makes me sick b/c the bank are doing nothing to help repair the housing market, in fact they are making it worse. At least investors are getting creative. I recently heard of investors buying bulk notes, the "owner financing" the homes back to the original homeowners! I mean they are eliminating the homeowners debt, allowing them to remain in the home, and helping them pay off the home! Why can't the bank do that or make way for investors too?

frameless shower screens8/16/2010

lemon.035@gmail.comA house is a home, shelter, building or structure that is a dwelling or place for habitation by human beings.

Donnay Homes8/16/2010

slshkcs@gmail.comBad credit home equity loans can be used for varied purposes like debt consolidation, home improvement, retirement plan and vacations. You very own home has such a treasures embedded and you did not even know.

Cheap Health Insurance8/13/2010

dwineje@gmail.comGood for the investors, but hopefully it would help each and everyone of us for the present economy...

Seattle Foreclosure8/11/2010

kevin@seattleshortsaleblog.comI think investing in short sales for the purpose of immediate resell is OK as long as the investor has an alternative exit strategy in the event that there is not enough profit spread (ie. lender paid negotiation fees). I don't like seeing profit spreads being the cause of a homeowner going into foreclosure..

Kyle the Appraiser8/8/2010

info@myhomecomp.comMike - this rule has been in effect for a while now, but there are still new investors who don't know about it and I have seen them caught with their shorts down. Luckily I have been able to warn a few customers who have used my comp check service (www.myhomecomp.com) before they got in. I like the intent of the rule, but it isn't practical for many cases. I'm glad it will eventually expire.

Tim Carver7/31/2010

tlcarver1@comcast.netThanks for the article. I'm a "newbie" in real estate and trying to learn as much as I can.

rich janitor7/30/2010

ridex722@hotmail.comgood information to know thanks.

Toronto Real Estate7/30/2010

christina@christinacatana.comSuch requirements are non-existent for fixing and selling houses in Toronto. But its good to know for Canadians who want to use their real estate skills in the US.

Jeremy7/30/2010

jeremy@oceanstatehomes.comThe problem is finding a bank that will follow these guidelines. <a href="http://www.oceanstatehomes.com/" rel="nofollow">We buy & sell houses in Rhode Island</a> and we get penalized for rehabbing a house to quickly.

Michelle - bank supplies intern7/30/2010

mmccorkle@optimumcompanies.comReally glad that it's easier for first time buyers to buy homes! I think banks are starting to get their acts together, too, and a lot of people are looking to community banks that they can feel connected to. At the same time, these banks are learning to outsource things that don't relate to their core competencies, like finding one-stop shopping for office supplies and printing and increasing security while saving money with tamper evident deposit bags.

Brian the FHA Loan Guy7/29/2010

info@fha203-k.comNow all they need to do is allow Investors to use the FHA 203k loan for repairs. http://www.fha203-k.com This would help with rehabs if you can't pay all cash. In any case it's a decent program for owner occ buyers who want to buy that fixer

Texas Home Buying Tips7/29/2010

msmith0902@gmail.comGreat article. Thank you. Learned a lot. Keep it Up!

jrogers7/29/2010

joerogers7@hotmail.comIt was nice of Congress to extend the timetable for closing documents to be completed for qualifying for the first time home buyer and long time home owner/buyer credit. Buyers now have until Sept. 30th 2010 to finalize the closing docs and still qualify for the tax credit. Note that the original deadline of April 30th 2010 for having an accepted contract on a home was not extended, just the closing deadline. We have put together a newsletter relating to recent tax law changes and how it will affect everyday taxpayers at www.federaldirecttax.com Please feel free to visit and subscribe to the newsletter for free monthly updates to the tax code and how its effect on tax payers and tax practitioners the like.

San Diego Real Estate7/28/2010

aboyer@SDFRealEstate.comWe have to have all parties sign "arms length transaction" declaration stating that there is no funny business.

San Diego Real Estate7/28/2010

aboyer@SDFRealEstate.comWe made an offer on a short sale the other day (lender: Wells Fargo), and the seller, buyer, and the agents all have sign that it is an armslength transaction. "Under penalty of perjury..."

Jeremiah M. Wean7/28/2010

jwean@lakewoodlenders.comThis has been wonderful for people purchasing a house and fixing it up and reselling. And in this market there is plenty of opportunity for that. I'm sure this has helped relieve some of the banks of their excess inventory of foreclosures.

Lew Corcoran7/27/2010

Lew@StarMortgage.comWhenever someone purchase a home and fixes it up before reselling it, it shouldn't be subject to a 90-day "anti-flipping" rule. An investor bought the home, made improvements so that the safety and hability of the home is enhanced. It therefore becomes a marketable property that is worth more. It's those who buy homes for no purpose other than to resell it for a profit that should be subject to the anti-flipping rules.

Michael7/26/2010

info@flapropertyfinder.comWith the new FHA 90 day seasoning gone, Tampa real estate investors are going crazy right now doing A-B-C transactions with the C buyer going FHA, not just cash! The banks are coming around and starting to accept these type of transactions.

Robb the San Diego Wholesale Deal guy7/26/2010

robtbaileyjr@hotmail.comLifting restrictions on real estate investors only helps the real estate market strengthen itself quicker. Banks want to loan money on a good property to a qualified buyer. Neighborhoods want surrounding homes to be taken care of and kept in good shape. The buyer wants a newly renovated place that they can move right into and call it home. I personally think that this time in the market will re-define real estate investors as the unsung heroes of our economy. Residential redevelopment is profitable if you can cut out all the red tape, and FHA is doing just that. If you've ever wanted to flip houses but don't know where to begin, I'm offering a [b]Free 7-step mini-course on How to Break Into Real Estate Investing[/b] on my website. I show you step by step how I started flipping houses for a profit, while providing good homes to good families in San Diego. I hope FHA permanently lifts the 90 day rule, fingers crossed!

The EZShorts Guy7/25/2010

jack@ezshorts.comRight Mike!! The FHA buyer pool is huge and has not been at the table. Our EZShorts clients will be glad to know that the elitist glasses are de-fogging and some rule changes will help bring the FHA buyer pool to the table and deals can move faster and have better odds of a buyer at all. I'm sure you have lost deals to foreclosure like we have when there were herds of FHA buyers wanting to come to the table but the rule obstacles prohibited it, and there were not any cash or conventional buyers to be found for those deals. That also makes the work smoother for our EZShorts staff too when there are more buyers to select from and have plenty of backups, etc. Good stuff...thanks for the post and I really like that photo of the upside down house...coolness. -------------- Respectfully, The EZShorts Guy

Ramon real estate broker7/24/2010

ramon@crumassociates.comThis is an awesome article. I am thinking about flipping my first property. any advice??

Mike Jacka2/22/2010

mikej@realestatepromo.comYou are absolutely right Paul, I agree 100% about something having to give and I think we are starting to see things giving, just a little, but every little bit helps. Congratulations on your closing and good luck reselling it. Give us an update.

Paul Tomlinson2/22/2010

pauly999@gmail.comFantastic news. I'm closing (buying) a property this Friday and this property will be the first that I will have an opportunity to... hopefully take advantage of the new FHA guidelines. I truly think that the mortgage system needs to be re-looked at. Whether its 40 or 50 year loans or a combination product that isn't interest only, meaning the mortgage is being paid down each month, something has to give.

Mike Jacka1/19/2010

mikej@realestatepromo.comThis is huge, just think of all the potential deals that we can now take advantage of. The biggest drawback for most investors has been that if they do get a good short sale negotiated, their back-end buyer couldn't get an FHA loan, and in today's market, FHA is the largest lender for these properties.

Ryan1/18/2010

Ryan@MnREIA.comWow! This is some great news!


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