Getting Around Seasoning Laws
I have read alot but these new seasoning laws confuse me. If I get a porperty under contract ,how do I flip it to a re0-habber without being harrassed with these new seasoning laws. Do I assign it or what ?
Need help please
Nick 
If you are flipping it, then seasoning law should not apply to you since you never hold tile to the property. The property is still under seller's name and the rehabber buys it from him while paying you some assignment fee.
Fannie Mae and Freddi Mac don't really care as long as the property was not flipped over a few times in a few months. We called them up and ask them this question. What do you mean by a few times and a few months?? They did not have a definate answer to the question. So we interepreted this way. As long as it wasn't flipped more than 5 times in 6 months.
Quote:
On 2003-09-04 15:23, hrash wrote:
If you are flipping it, then seasoning law should not apply to you since you never hold tile to the property. The property is still under seller's name and the rehabber buys it from him while paying you some assignment fee.
This may be a separate problem, but I have heard some lenders will not lend $ unless the contract has the seller and end-buyers name on it.
When I think of assignment, I think of 2 contracts: seller to middleman, and endbuyer to middleman.
Is this a problem for others? What solution is working?
Lenders don't like to lend to end buyers who are buying from sellers who has held prop less than 12mo. This is called seasoning. Freddie Mac/Fannie Mae may say they don't care until you try to put a loan thru them, then they tell you no. Already tried. One way around seasoning is you have done rehab work on the prop and have documents proving the work. Lenders will lend off of new appraised value, not purchase price and will waive seasoning, this goes for refi also. But you will have to prove rehab work.
As far as assignable contracts, this is also true if you are assigning contract and your amount w/ end buyer is more than your contract w/ seller and end buyer is using conventional lending for entire purchase price. IE sign w/ seller for 100000, assign to buyer for 110000. Even if your contract is at fmv or under, no go w/ conventional lenders. The way around this is to assign contract to buyer for same amount your contract is w/ seller but buyer would have to pay you out of their pockets. Lenders have no issues w/ this as long as it looks like you're not making any money of the deal.
Seasoning isn't a law, just lenders preference. And right now, most lenders will not lend if you have seasoning issues unless you have done rehab work and can prove it. I have found some lenders who will waive seasoning w/ no rehab, but they review on a case by case basis.
"Lenders have no issue with this" wow all the closing I ever had they were interested in just that with a document stating there were no underlying Deals between the buyer and seller
Correct "as long as it looks like you're not making any money of the deal."
How you go about doing that, well I won't recommend, but if you were willing to, that is the way to do it.
So if I buy a property outright for 60 cents on the dollers did no rehab and then wholesaled it to a pre approved end retail buyer at 80 on the dollars his lender will not go through with the purachase?
Marz you are correct. You will have a tougher time. There are lenders out there without seasoning issues. Best to get a good mortgage broker on your team to help your potential buyers out.
Good Luck,
Tom
Its a lenders preference. Unfortunately, a few bad apples are spoiling the bunch. Investors hyping up appraisals and huge amounts of foreclosures are causing some lenders to take notice of things they used to 'ignore'. Subprime lenders almost never care about seasoning issues since the borrower is paying higher interest rates due to the higher overall risk of the loan. Just shop around and you will find someone. IF anyone knows of lenders not caring about title seasoning issues, maybe they can post them here
Guys, the best way around this problem is to sign the property to a land trust in the name of the seller's family but with you as the beneficiary. This is what land trusts are there for IMO.
Say I (as an investor) was buying from jon doe. I would sign the contract and deed over to the "Doe Family Trust". I would be the sole beneficiary of the Trust. But, guess what?; no one knows that except you.
follow?