Flipping Scares Off Mortgage Companies???
I spent a night last week talking to a California mortgage broker who advised against a career in flipping properties. She cautioned that a property that has changed hands repeatedly in a short period of time sets off alarms in the eyes of mortgage brokers ringing "inflated appraisal value!" As a result, her company would not approve mortgages to purchase properties for sale by "flippers." :-o
Has anyone else come across this issue? What has been done to circumvent or overcome this hurdle? :-?
Thanks!
Haykes from DC 
Having the term "assign" in your contract will help get around the seasoning/flipping issues.
I recently had the same thing told to me. I was told by my broker to take the word "flip" out of my vocabulary!
A behavoir shared by many risk averse mortgage brokers and mortgage bankers.
If you encounter that on your pre-interview of the mortgage broker or banker, don't argue. Their fears and concerns are valid. But be willing to pay for two appraisals, or a 'desk review appraisal' if that will calm their concerns. Or, just keep shopping for another broker or banker.
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Short Sale Practitioners can't predict, or guarantee results... but can take steps to insure the likelihood for success....[ Edited by TheShortSalePro on Date 05/26/2004 ]
Most brokers are not real estates investors. People are afraid of what they don't understand. If you plan on this type of career then you should find people who are going to work for you not against you. Call until you find a broker who is also a Real Estate Investor.
You can and there are mortgages available to "flippers"
Lori
[addsig]
Following Lori's post, "the confused mund always says no" They don't understand.
I have brokers that don't care and handle flips all the time, you can find one too.
[addsig]
I'm not really concerned with finding myself a broker, as I am already building relationships with brokers comfortable with flipping. My concern is having a deal to a seller fall through the cracks because my buyer is scared off by their mortgage company telling them that it is high risk and denying a mortgage.
You should have already introduced your own mortgage banker/broker to your potential buyer... before this even became a problem.
[addsig]
I agree with the above posts. My mortgage broker will do whatever he has to do to get the deal done. He could care less if I was flipping it, as long as what i'm doing isn't illegal and the bank doesn't call him because they foreclosed on a loan he brokered. Just find a good broker.
Can someone verify the following:
After talking to approximately 15 Mortgage Brokers regarding the issue of Flipping a SFH, I was told the real issue of "Seasoning" is because they have to rebate back a percentage of income received in the origination of the loan
Taiyo
I guess that it may be wise to eliminate the word "flipping" from your vocabulary.
There are plenty of lenders (conventional-and subprime conventional) who don't care. Just be sure that what you're doing is legitimate without fraud, collusion, or accomodation.
Some lenders are concerned because they may have a full recourse loan which they may have to "eat" for the first 12 months if things go bad.
Some loan officer's are concerned because they may have to give back some of the yield spread if the loan is
paid off during the first year,
Well, you took the risk and you should be able to realize the reward.
The lenders know how to protect themselves via underwriting,rate,and points,quality control,etc.etc..
The loan officer knows how to protect themselves via prepayment penalty and/or points.
Don't worry about them. They know how to assess risk. Find a lender who wants your business.