So I have read in many places and discussed with many attorneys about the 30 - 90 day anti - flip requirement for short sale acceptance.

However, has anyone ever bothered to question the banks legality for requiring this?

Can a seller or anyone tell you what to do with what you "own?"The bank does not own the property. They only approve that the seller sell the property for less than what is owed. That's all.

Its like me buying a Mercedes Benz and the dealer telling me that I cannot drive it for 90 days or I cannot resell it to a willing buyer!

Who gave the banks the power to dictate what you can do with a property that you own?

The only reason I haven't done it is that I haven't found a title company that will close such deals.

By the way, its not a fraud unless you used deceptive means in getting the lower price.

However, if the bank accepts a price and I find someone a week later who is willing to pay considerably more for whatever reason, then thats fraud? Just cos they lost some money.

I'm so happy for the foreclosure settlement deal. They can defraud everyone (the whole mortgage crisis, predatory lending, stated incomes to qualify people for loans, robo -signing, mortgage back security frauds e.t.c) and it all good as long as they are making money?

I say it is not legal for the bank to tell anyone what they can do with their property or how much they can sell if for.....

It would be nice to have some discussion around this by anyone ......

What's the main purpose of this anti - flip requirement???

Yes, a seller can put a deed restriction on a property, and that is perfectly legal in the real estate world, as long as they make you sign and agree to it before.. Current Fannie Mae, and maybe some others, put a 90-day deed restriction on a property when you buy it where you can't sell for more than 120% of what you paid. The restriction gets recorded along with the deed so that the property can't be conveyed. If you don't agree to it in the contract, I don't think they can sneak it in on you at closing.

It's similar to how conservation easements are created. You can also do them for property use, i.e. a church selling land but requiring it not be used for gambling, a liquor store, etc.

There are 2 issues regarding the anti-flip requirement. The first is with the short sale lender. Some lenders will have anti-flip language in their approval letters, arm's length affidavits, or a no flip affidavit. Not all lenders have this language, and a good negotiator can often get it removed.

The second issue is with the 2nd buyer's lender. Although FHA has waived the 90 day seasoning, many lenders have policies that are more stringent. That being said, if you do your homework, you can find many that will allow it. They may only allow a 20% increase in price, or have requirements such as a second appraisal.

I have had no problem finding title companies that will close a second buyer within a few days of the first, as long as you're not asking them to close when there was a clear no-flip requirement from the short sale lender. Get that removed, and you will be fine.

You will also want to pay attention to state laws. In Colorado, a law referred to as, The Colorado Foreclosure Protection Act, essentially creates a 14 day holding/seasoning requirement for property purchased during foreclosure from the owner/grantor, before an agreement to sell the property is permitted.

This post is only my personal opinion. I make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the information. None of the content should be considered a binding offer or agreement. Any terms or rates mentioned are subject change without notice. I am not an attorney or other legal or tax professional.

I agree with u that banks have given themselves too much power and have no business telling u what u can and can not do with your property. That said, if the language is in the contract or adendumz and u sign it, u have now agreed to it. The banks only power really comesvfrom their ability to say take it or leave it. So if u cant get the verbiage out then u skyscrapers the option to pass or agree to the deed restriction.

OK. So, has anyone been successful in getting the verbiage removed and if so, pls can you share how you negotiated the removal.

Thanks!

Unfortunately these banks are seeing these transactions as fraud now. The banks are in full control and if they don't want to sell the house then they don't need to. The reason these anti flip affidavits and arms length came about was because so many investors were buying a short sale property with an immediate sale lined up for a profit. This is what the investors were doing back in the day. The short sale banks have caught wind and have now determined it to be illegal. know it sucks!

Also in Colorado this has become illegal even if the bank doesn't give any stipulation. If the Colorado Foreclosure Protection Act applies then you can't resell the property for 14 days unless you do full disclosure.

I don't recommend these transactions to anybody. What you should do is buy a short sale to resell for a fix and flip or to buy and hold. This is the best exit strategy and you don't have to worry about doing something fraudulent.

I've seen them in contracts but I have never seen them enforced before. Short of the deed restriction recorded with Fannie Mae, the rest record like a normal deed.

I believe it is just a deterrent, but I wouldn't want to test it ;)

I call them the greed restriction, since the whole idea is that if the bank is taking less they want to make sure they get all they can as if they are not smart enough to know what a property is worth....that if there is a dollar out there, they want it.

They just thought they were getting the short hair on quick flips.
Restrictions are to the transfer of title. Last one I did I was asked if I intended to sell the property, my response was probably some day since everything I own is for sale! Besides, they know good and well I don't collect houses anymore....

You might think about closing in escrow and transfer title in 91 days. Non-owner occupied can be leased from day one and I doubt anyone can say anything about the contract date as it goes away after settlement