February 6, 2010
FHA To Lift 90 Day Seasoning
On February 1, 2010, FHA guidelines that stipulated for a 90-day “seasoning” requirement were lifted. The waiver has been in the works for a year. By removing the seasoning requirement, FHA makes it easier for rehabbers and ”flippers” to resell the foreclosed homes that they have rehabbed. This opens up a broader market and makes more homes available – particularly to first time homebuyers where the $8000 tax credit is having huge impact.
However, there are certain conditions that must be met:
All transactions must be arm’s length. There can be no relationship or interest between buyer and seller. Underwriters will be looking for the following:
1. That the seller is on title.
2. That LLC’s, corporations, or trusts serving as sellers are operating in accordance with applicable state and federal law.
3. That there isn’t a pattern of previous flipping activity (multiple transfers) within the last 12 months.
4. That the property was marketed openly and fairly, via MLS, auction, FSBO, or by developer marketing.
5. Any contracts with an “assignment clause” may be red flagged.
If the sales price of the property is more than 20 percent above the acquisition cost, the waiver will only apply if the lender:
1) Can justify the increase in value with either supporting receipts for work actually done and/or an appraisal that verifies that the seller has completed sufficient legitimate renovations and repairs.
2) Orders a property inspection and provides the inspection report to the purchaser before closing. The lender can charge the buyer for the inspection. No other party can pay for the inspection besides the lender.
The FHA 203K program allows you to:
1) Buy with only 3.5% down;
2) Make all needed repairs; and
3) Make no payments are due until the work is completed (must be completed within 6 months).
Get more info on how you can use the FHA 203K program to buy property a now. Listen to the instant replay of our free teleseminar simply by registering on the right. >>>
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