All Forum Posts by: Dave Williams

Hi Joe,
Welcome!
Searching through the jungle of lenders is a task that can take forever. As a lender, I will tell you that having a deal in hand when you talk to lenders will get you a lot further, faster. That said, talk to a few and get the basics, costs, turn times, etc. Then go ahead and place you offers. If you get a GOOD deal under contract finding the money is (should be) the easy part. While I don't lend term loans in NJ, I would be happy to answer any questions you may have.
Best of Luck!

The biggest problem we are all facing surrounding seasoning is the rules change on a daily basis.

As a flash cash lender we are involved in 100's of transactions per month ( nationally ) and have done quite a bit of research on the subject. So here's what we have found, please understand this is a moving target and may change by the time you read this.

Loan/Lender Seasoning
1) FHA has a 90 day seasoning requirement. FHA guidelines say 90 days starting at conveyance date, however every lender I know of goes of recording date.(Technically, you can get an exception from SOME lenders if the recording is delayed, they can go of closing date, but then you have to give them the hud an closing docs to prove it, which you may not want to do).
2) Fannie & Freddie have NO official seasoning requirements in their guideline as of yet. (Rumor has it both are publishing new guidelines in the next few months and this may change, we'll have to wait and see). However, all the major lenders I know of has imposed their own guidelines on top, requiring anywhere from 1-180 day seasoning. The seasoning issue can even vary by the various underwriters in the same company.
3) VA & USDA have NO seasoning requirements.

Lenders to consider
I agree with Ryan. I have seen the best success with local CU's and regional/small banks. The other one to consider is Correspondent Brokers. Basically you are looking for people who underwrite in house and sell the paper to the big boys based on the guidelines. I have noticed lately even the correspondent brokers are starting to tighten up.

Change in communication is suggested.
We tell all our clients to stop using the terms "Double Close", "Back2Back Close" and "Simultaneous Close" if you are using flash cash to close your deals.

Here's why, when banks, loan officers, realtors, etc hear these terms, they all think there is something fishy/illegal going on (check with your state laws to make sure it's okay to do these). Let's face it, nobody other than an investor truly understands what this means so why confuse things. Our position is simply, "I'm an investor and I will be buying the property with cash, and I will be reselling it shortly after. I may go on title as late as the day of sale depending on how long it take to get the closing & recordings done. These will be 2 completely separate transactions." I also make sure title prepares a 12 months chain of title showing I am scheduled to take title prior to the projected closing date for their transaction.
By taking this approach, it tells the lender and everyone involved that there is nothing tricky going on here and you are not using the buyers funds to purchase the property (which is a big issue right now), also shows the b side lender that you will have ownership of the property prior to the sale to the end buyer. We have had great luck with this strategy for Conventional buyers, but it's not 100%. This does NOT work for FHA.

Land Trust comment
Using a land trust does not "eliminate" a break in the chain of title. When you transfer the property into the trust, the chain will reflect that transfer. So then any seasoning starts as of that date. Which would be considerably early than the date of a option or sales contract. So it may shorten your waiting period. Each state differs on the requirements surrounding "Trusts" so do you research. Also note that some lenders will not funds transactions that are coming out of a trust.

Suggestion
Find a local bank/broker that is willing to fund the transactions, again watch your terminology. There isn't a lender on the planet that wants to hear you are going to be using their funds to buy the property on the a side. Then direct your buyers to them. Lenders are out there willing to do it, but how you present it is critical.

Hope this helps.
Dave Williams
Investors Choice Funding

Your not really getting around any REO rules on wholesaling unless the lender ends up clouding title for resale, which some are doing now. The easiest way to think of this is 2 totally separate closings. You are closing the a side transaction using a flash cash loan, then you are selling the property in a separate transaction where you loan is going to be paid off. I have been doing flash cash loans for a few years now and very seldom do you run into any issues, but in this business the rules change so often you never know. Hope this helps.
Dave

If it truly is a "Cash" buyer, you shouldn't have a problem doing a back2back closing, as long as the lender on the a side doesn't do anything stupid with clouding the title for resale. Assignments are a bit tricky as most of the major banks no longer permit it. Good Luck