I just spoke to my Mortgage Person and she told me that Fannie Mae is instituting a law that says you must hold title for 90 days, to stop flipping. Has any one heard about this?
No, but have your mortgage person email or fax you a copy of the law, so you have it in writing. If you get it in email, please post on this site so we can check it out. Thanks, Dave
No, but as a mortgage broker, I can tell you that Fannie loans are seldom used by investors, mainly because they are too stingent as it is. So this new law, if it indeed exists, makes little difference, in any.
So mush on!
Pete
Yes, sorry to say this is the new fannie mae rule. And yes investors do not ususally use fannie mae loans to buy houses...however, when we sell houses we more often than not sell them to fannie mae buyers..that is where the problem will come into play. There are exceptions to the rule...you will have to prove you rehabbed the house and or that the property was a distressed sale...there will be ways around it.....take them as they come...
I read a good article about this. The law was cited as having only a minor effect because it affects mostly low income housing or roughly 15% of the houses bought in the low income bracket. Further, it says that these are houses purchased through Fannie Mae. This means that it will only end up really causing a difference in at most 8% of the properties out there that are financed for low income purchasers, usually first-time buyers or people in the low income bracket getting back on their feet. Hope that helps.[ Edited by longhorndb on Date 02/11/2004 ]
Everyone needs to quit calling this lender requirement a LAW. It is not a law.
HUD published a regulation last year which prohibited buyers from using an FHA insured loan to purchase a property from a seller who has been on title less than 90 days.
It now appears that Fannie Mae has implemented a similar rule that may apply to the underwriting guidelines employed for the mortgages it purchases in the secondary mortgage market, but it is not law. There are lenders in the marketplace that will make loans without regard to title seasoning.
Any further developments on this one? Last week, I had four prequalified buyers ready to sign a contract and Fannie Mae turned them all down because we've owned the property for only 30 days. Finally, we found a buyer with an unconventional lender, but I don't want to go through this every time.
Thanks for the tip about documenting the rehab costs. I'll use that next time.
A broker I know in the area got around it by renting the property to the prospective homebuyer for 2 months. After the 90 days passed he sold the property w/ no closing costs, but did keep the rent income. This would not be considered unethical/illegal would it? Of course future owners were notified and agreed to rent for the months in retrun for the broker/owner paying closing costs.
As DaveT said, FHA will not even touch the loan if it has been less tha 90 days. After that, if the property has been titled for less than 1 year and more than 90 days, you MUST provide documentation to prove that you have done some legitamate rehab to the property. (pictures and receipts)This is important to know because even though most investors don't use government loans to buy houses, a lot of buyers do. Also, these guidlines are now rapidly spreading throughout the entire industry that includes ALL types of loans, including convential !!
No, but have your mortgage person email or fax you a copy of the law, so you have it in writing. If you get it in email, please post on this site so we can check it out. Thanks, Dave
No, but as a mortgage broker, I can tell you that Fannie loans are seldom used by investors, mainly because they are too stingent as it is. So this new law, if it indeed exists, makes little difference, in any.
So mush on!
Pete
Yes, sorry to say this is the new fannie mae rule. And yes investors do not ususally use fannie mae loans to buy houses...however, when we sell houses we more often than not sell them to fannie mae buyers..that is where the problem will come into play. There are exceptions to the rule...you will have to prove you rehabbed the house and or that the property was a distressed sale...there will be ways around it.....take them as they come...
Hope this helps
I read a good article about this. The law was cited as having only a minor effect because it affects mostly low income housing or roughly 15% of the houses bought in the low income bracket. Further, it says that these are houses purchased through Fannie Mae. This means that it will only end up really causing a difference in at most 8% of the properties out there that are financed for low income purchasers, usually first-time buyers or people in the low income bracket getting back on their feet. Hope that helps.[ Edited by longhorndb on Date 02/11/2004 ]
Everyone needs to quit calling this lender requirement a LAW. It is not a law.
HUD published a regulation last year which prohibited buyers from using an FHA insured loan to purchase a property from a seller who has been on title less than 90 days.
It now appears that Fannie Mae has implemented a similar rule that may apply to the underwriting guidelines employed for the mortgages it purchases in the secondary mortgage market, but it is not law. There are lenders in the marketplace that will make loans without regard to title seasoning.
I want to thank everyone for their valuable contribution to this topic.
These guidelines are not to stop people from flipping. It has to do with predatory lending.
Lori
[addsig]
Any further developments on this one? Last week, I had four prequalified buyers ready to sign a contract and Fannie Mae turned them all down because we've owned the property for only 30 days. Finally, we found a buyer with an unconventional lender, but I don't want to go through this every time.
Thanks for the tip about documenting the rehab costs. I'll use that next time.
Well, this is a case of, "Monkey see. Monkey do". First HUD, now FNMA.
Try to get the reg number for this new rule.
Keep current on the lenders who do not require seasoning. This will be ever changing. When you have a buyer send them to that lender.
A broker I know in the area got around it by renting the property to the prospective homebuyer for 2 months. After the 90 days passed he sold the property w/ no closing costs, but did keep the rent income. This would not be considered unethical/illegal would it? Of course future owners were notified and agreed to rent for the months in retrun for the broker/owner paying closing costs.
Carpe Diem,
Veronica
As DaveT said, FHA will not even touch the loan if it has been less tha 90 days. After that, if the property has been titled for less than 1 year and more than 90 days, you MUST provide documentation to prove that you have done some legitamate rehab to the property. (pictures and receipts)This is important to know because even though most investors don't use government loans to buy houses, a lot of buyers do. Also, these guidlines are now rapidly spreading throughout the entire industry that includes ALL types of loans, including convential !!