Reinstatement of Anti-Flip Rule

15 Replies

What is the creative solution around the re-reinstatement of the anti-flipping rule? Is owner financing the best solution or are there others? This would also be a great opportunity for small banks or some other lending institution to get into home mortgages geared toward financing for investors only. 

What is this anti-flipping rule you speak of?

Chris - I assume he's talking about the expiration of the FHA 90-day rule waiver.

Michael - this only prisons to FHA loans, so the work around is to have your buyers go with conventional or VA loans. Owner financing would cause even bigger issues given Dodd-Frank and the SAFE ACT.

If you're speaking of the seasoning required to pass title after a purchase, seller financing has nothing to do with that.

Best way to "get around" such requirements is to comply, lease-option, delayed sale contract with right of possession or lease it and sell later. If a bank sells, they may use a restrictive deed, you can't sell it until the restricted period passes, doesn't mean you can't have a sale arranged, you just don't pass title until you're passed that period. :) 

Originally posted by @J Scott:

Chris - I assume he's talking about the expiration of the FHA 90-day rule waiver.

Michael - this only prisons to FHA loans, so the work around is to have your buyers go with conventional or VA loans. Owner financing would cause even bigger issues given Dodd-Frank and the SAFE ACT.

 Yes that the rule I am referring to...please excuse this newbie. Thanks for the clarification and the info. 

Originally posted by @Bill Gulley :

If you're speaking of the seasoning required to pass title after a purchase, seller financing has nothing to do with that.

Best way to "get around" such requirements is to comply, lease-option, delayed sale contract with right of possession or lease it and sell later. If a bank sells, they may use a restrictive deed, you can't sell it until the restricted period passes, doesn't mean you can't have a sale arranged, you just don't pass title until you're passed that period. :) 

 Hi Bill, could you explain the delayed sale contract for me please? Is this what is explained in this post or one of the other options?

Originally posted by @Chris K. :

What is this anti-flipping rule you speak of?

 Sorry for the mix up Chris..I meant the 90 day hold Rule.

Originally posted by @Bill Gulley :

If you're speaking of the seasoning required to pass title after a purchase, seller financing has nothing to do with that.

Best way to "get around" such requirements is to comply, lease-option, delayed sale contract with right of possession or lease it and sell later. If a bank sells, they may use a restrictive deed, you can't sell it until the restricted period passes, doesn't mean you can't have a sale arranged, you just don't pass title until you're passed that period. :) 

Bill - This is a restriction on the the end-buyer (retail buyer) imposed by FHA. This isn't a restriction on the rehabber...so seller financing would be a work around, but it obviously has other issues (Dodd-Frank, SAFE ACT).

Ah, as to the FHA loan, yes that would, I didn't know what his delay was, such as REOs. Yes, DF may apply as to a dealer, SF deals should be using a RMLO anyway, IMO. :)

This is how I understand the anti flipping rule.

Last 4 years was waived, 

Jan 1 2015 rule is now back.

For 90 days you can not sell.  

You must have on the P and S agreement 91 days and greater as the sale date.  

You can not have on the 1003 mortg app a date younger than 90 days from your closing date.

So basically 90 days plus 45 to 60 days to originate and fund.  Not fun.

http://www.floridarealtors.org/NewsAndEvents/artic...

Originally posted by @Brian Gibbons :

This is how I understand the anti flipping rule.

Last 4 years was waived, 

Jan 1 2015 rule is now back.

For 90 days you can not sell.  

You must have on the P and S agreement 91 days and greater as the sale date.  

You can not have on the 1003 mortg app a date younger than 90 days from your closing date.

So basically 90 days plus 45 to 60 days to originate and fund.  Not fun.

http://www.floridarealtors.org/NewsAndEvents/artic...

The seller is certainly allowed to sell within 90 days...an FHA buyer just can't buy (it's a buyer restriction, not a seller restriction). So, the seller could sell to a cash buyer, conventional loan buyer, VA buyer, etc. FHA just won't finance a buyer for the first 90 days.

Also, FHA doesn't prohibit getting a signed contract within the 90 day period and closing on the 91st day. Some lenders may have overlays that prohibit it (some did back before 2010), but this isn't part of the FHA rule (at least it wasn't before 2010).

We used to close on Day 91 all the time before 2010...

Before I stopped selling my flips to FHA buyers years ago, the underwriter used to get too far into my business...to the point of asking for my receipts for all my materials I purchased. Then when they started asking for more than one appraisal, I decided I didn't need FHA as bad as those lenders/underwriters thought I did.

We have dealt with this a lot being our fist year in business, the most frustrating part is that each lender is different. However most lenders even if we are within the 90 day period it just mean that we had a few more hoops to jump through and primarily just a 2nd appraisal that the buyer cannot pay for, but like I said each lender is different some would not work around it. In those cases the lender would work the deal and continue and we would just date the sales contract after the 90 day period. Of course we could not close within the 90 days still. Just my experiences.

Originally posted by @John Mathewson :

However most lenders even if we are within the 90 day period it just mean that we had a few more hoops to jump through and primarily just a 2nd appraisal that the buyer cannot pay for...

As of three days ago, this is no longer the case...

Originally posted by @J Scott:
Originally posted by @Brian Gibbons:

This is how I understand the anti flipping rule.

Last 4 years was waived, 

Jan 1 2015 rule is now back.

For 90 days you can not sell.  

You must have on the P and S agreement 91 days and greater as the sale date.  

You can not have on the 1003 mortg app a date younger than 90 days from your closing date.

So basically 90 days plus 45 to 60 days to originate and fund.  Not fun.

http://www.floridarealtors.org/NewsAndEvents/artic...

The seller is certainly allowed to sell within 90 days...an FHA buyer just can't buy (it's a buyer restriction, not a seller restriction). So, the seller could sell to a cash buyer, conventional loan buyer, VA buyer, etc. FHA just won't finance a buyer for the first 90 days.

Also, FHA doesn't prohibit getting a signed contract within the 90 day period and closing on the 91st day. Some lenders may have overlays that prohibit it (some did back before 2010), but this isn't part of the FHA rule (at least it wasn't before 2010).

We used to close on Day 91 all the time before 2010...

 Thank you @J Scott for clearing that up.

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