Real Estate Consultant · Minneapolis · Member since 2009 · 60 posts · 8 votes
Purchased a fixer and someone offered me $15,000 more to buy it as is. Since I just closed on the property - how can we get around FHA's 90 day seasoning requirement.
I just did this on another property - bought an REO and sold it immediately. My buyer used Wells Fargo conventional loan and they were reluctant to finance the deal. Wells would only finance up to the amount I paid for the REO - requiring my buyer to come up with additonal down payment.
If your flipping or rehabbing and reselling in less then 90 days how do you finance the resale - without using hard money?
Reluctant to do a short lease - buyer moves into property prior to closing then nit picking property and backing out of purchase.
I have the same concerns about doing this, but you have to decide if this is a better or worse alternative to waiting 90 days...
Btw, I highly recommend checking with the title company to make sure that they record the deed quickly...I had a situation this week where I found out the title company screwed up, and still hasn't recorded the deed after more than 2 months.
I have an offer on the property, but it's FHA, and the 90 day clock STILL hasn't started ticking...
Another FHA rule states that any potential buyer who rents the subject property cannot purchase for 180 days after the tenancy commences. Also, FHA regs state the property cannot be sold until the 91st day after current ownership. Some FHA lenders allow an agreement and application during the 90 day period and others will not allow the purchase agreement to be signed until the 91st day. Thought all would be interested.
To answer the original post question - YOU CAN'T! Getting around this issue is not possible (as far as I know) so you must use other means - conventional buyers only, all cash buyers, local banks carrying their own paper, etc.
Unless the rule changes or someone can post a real alternative to actually circumvent this BS rule, the answer remains - we can't.
To answer the OP question - Yes - you can get around the FNMA 90 Day rule - once you get your deal locked up with the bank you can have your realtor / broker whomever do an addendum to get it reduced to 0 days or whatever.
I do it all the time - successful more then not. Getting it to 0 days is more difficult but getting it to 30 days is VERY common.
I have also made it part of my original negotiation - just see what the realtor is comfortable with.
And to whomever said use "and / or assigns" - yes - go ahead and try that :)
That will not work.
But you can get it reduced a good portion of the time.
Scott, clear this up for me a bit. In this thread we are talking about selling a property that we have owned for less than 90 days to an FHA buyer. How do we get around the title seasoning so we can enter into an escrow with an FHA buyer prior to the 90 days? Are you talking about the same thing?
So to be clear then, there is no way around the 90 day FHA seasoning rule (having to own the property/title recorded, for 90 days BEFORE your end buyer can enter into a loan app. with FHA), correct?
Stupid rule all together anyways, but unfortunatley, out of our control, so I just assume avoid FHA buyers and that is MY circumvention.
Make sure your title company records the deed quickly - some are busy and take several weeks to get deeds recorded at the county - only delaying the process.
Areas of Minnepolis/St Paul have become a sellers market and I can find plenty of conventional buyers, eliminating FHA problems.
So to be clear then, there is no way around the 90 day FHA seasoning rule (having to own the property/title recorded, for 90 days BEFORE your end buyer can enter into a loan app. with FHA), correct?
Unless you are an asset management company (which can get around the rules), that is for-the-most-part correct...
That said, some FHA underwriters are more lenient than others; specifically, I know of a couple who will allow a contract prior to the 90-day mark, but will require a new contract be written again on Day 91, with the final underwriting happening after that.
I have had this problem with a multiple buyers of mine trying to write on investor owned homes. I recently found a lender with First Savings Mortgage who still offers 5% down conventional. According to the lender they are able to still offer this loan program because they have a strong relationship with a Mortgage Insurance company who will insure these loans. Therefore if the buyer can afford to bring an extra 1.5% to the table, this is a great option. On a $300,000 deal it is a difference of $10,500 down for FHA and $15,000 for the 5% down conventional.
I would recommend you speak with the buyer agent and let them know that this program is available and to have their clients look into it.
So to be clear then, there is no way around the 90 day FHA seasoning rule (having to own the property/title recorded, for 90 days BEFORE your end buyer can enter into a loan app. with FHA), correct?
Yes - I am on the same page now and agree no way that I know of to get around that rule for us regular investors.
I recently found a lender with First Savings Mortgage who still offers 5% down conventional.
Yup, there are a lot of brokers who have access to this...
One thing to keep in mind is that 5% down conventional loans these days are going to require a FICO score a good bit higher than FHA underwriting, so not all of your borrowers qualify; but for those who do, this is a great option.
I will accepts financed offers before the 90 days but I require a 5k nonrefundable deposit. It weeds out the non serious buyers while locking up the escrow.
We have a USDA Loan program in our area that is similar to FHA - I think it's better because there is no pmi and can do a $0 down option and of course no title seasoning! Check with your favorite loan officer and see if it is available in your area. It's not available everywhere.
We have a USDA Loan program in our area that is similar to FHA - I think it's better because there is no pmi and can do a $0 down option and of course no title seasoning! Check with your favorite loan officer and see if it is available in your area. It's not available everywhere.
I imagine Amy is talking of the USDA rural housing loan..there are no seasoning requirements..I have just flipped 2 right outside of cincinnati within 30 day..one with a 62% profit..there are certain location and median income restrictions.
The POA does not do anything for you, but getting creative and having the homeowner add you to title certainly would remove the 90 day problem with FHA. That said, this would only work with homeowners and not short sales or REO properties (or properties purchased at trustee sale)
For those of you who didn't check Mark's link or haven't stayed up on your news, starting February 1st there will not be a 90 day seasoning rule for one year. They are rescinding it temporarily to increase the flow of houses.
Of course there remain some restrictions.
Your flip transaction must not be for more than 20% increase to what you paid for it or you must provide evidence to validate the larger increase.