No Seasoning Lenders
Anyone with specific experience with lenders who did not have a problem with the fact that a property was being resold 2 or 3 months later? I know that FHA wants at least 6 months of seasoning, and many conventional lenders are asking for a 12 month chain of title history. But I also know there are some lenders out there who do not care about seasoning. I am trying to compile a list of such lenders. I am from Illinois.
Hi MortgageMan,
If they are brokers, a lot of the seasoning issue is going to fall on the buyers situation. If they have such poor credit that they require subpirme financing, YOU will find it hard to do. If they have decent or bumped credit and can do it without sub prime, most brokers can get this done for you.
When you are trying to sell retail and are worried about the seasoning issue, make sure that you take control of who the buyer uses for their financing. And if they have already picked one out that they want to use, just make sure that they are not applying for an FHA loan. There are many other options out there that will be just as favorable to your buyer, but without the FHA rules!
I have had good experiences with Integrity Mortgage Services based out of Peoria Illinois and also Heartland Bank & Trust, who has many locations in Illinois!
Best of Success!
BAMZ
Sounds like someone is looking into property flipping? Good luck. I know of only 1 mortgage lender (excluding hard money lenders) that will allow any property to be re-appraised under 6 months. A few subprime lenders will allow a property to be refinanced at 110% of purchase value if seasoning is less than 6 months - Fremont being an example.
Mortgageman - please tell us you did not buy Carleton Sheets garbage??
If you are about to get involved with any party that believes they can flip properties, check with your state's real estate governing body. Wisconsin requires anyone who sells more than 5 properties in 10 year period to be a licensed realtor!
Best Wishes :-D
"cornerdave" what is your take on this "buying of broken down homes and reahabbing for a profit" phenomenon. Are we all going to jail in this crazy RE market.
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Far too much misinformation, ignorance, and lies ciruclate about property flipping. Property flipping is not illegal IF it does not involve fraudulent borrower information or artificially inflated appraisals.
While every real estate guru and get-rich quick web site touts property flipping as legal - none of them discuss the reality of property flipping.
Bare with me because I am going to get simplistic:
When you flip a property, how do you make the $$$? You sell the property to someone else at a higher price than what you have in it.
How does a person buy most property? They use a combination of their own money and financing from a mortgage lender. 95% of all real estate transactions over the last 30 years have been financed by traditional mortgage lenders - that means banks and credit unions.
So - if traditional mortgage lenders won't finance a property owned less than 6 months - then where will your buyer get their money?
See the reality of this? Buyers with great credit and a down payment are not going to deal with private financers because the rates and terms are robbery. So, the type of buyers who must deal with these financers are likely to have little to offer.
This "reality of property flipping" is a sore subject with the gurus as it takes their biggest marketing scheme and flattens it!
Property flipping does make money, but you the seller must think about the buyers issues and how they will fund the deal. Likely they will use traditional mortgage lenders who have strict property seasoning issues.
If you want to flip property, make $$$ AND avoid seasoning issues - hold your property for 12 months and rent it out!
Even if your rent equals your monthly PITI, you gain tax deductions and after 12 months of ownership, no traditional mortgage lender will blink an eye at you selling your property for its fair market value plus a year's worth of appreciation!!
After 15 years as a mortgage broker and personally talking to 1000s of real estate investors, I have been working with a group of folks who decided to write a real estate investment guide based on real world practices and techniques used by real estate investors that did not follow the gurus' ideas.
You don't need mentoring, boot camps, or advanced training. You do need to understand how the mortgage financing industry works, how underwriters think, and why positive cash flow is more important than flipping property.
Patricejames:
Sorry for not answering your original question. Seasoning requirements on properties and the "reputation" associated with property flipping have made rehabbers job more difficult.
Understand this, if you plan on rehabbing damaged goods and then selling sooner than 12 months - expect to have your deal scrutinized by traditional mortgage lenders. You may not have done anything wrong, but you will pay for the sins of your past colleagues.
The mortgage financing industry does not play fiar - they do play according to strict underwriting rules. The mortgage investors have the funding you need to make your profits! Better to learn how to play their game than try "back-door" schemes that will attract attention!
I guarantee that the first time you send a smelly deal to an underwriter, you will create a red flag for yourself and every deal afterwards will be scrutinized!
Make underwriters happy by sending loans that smell like roses. You will reap the benefits on future deals as you get underwriting rules bent for you!
If you rehab - keep receipts and don't expect to raise the value of a home $15,000 by putting on new storm doors and repainting the walls. Sory Carelton Sheets - their are no "quick and easy fixups" that result in "huge $$$$."
I think the seasoning issue is location based. No mortgage broker I talk to has any idea what I'm talking about and I have consistantly been without problems.
*knock on wood*
So you're saying that if I find a property worth 100K and I buy it for 60K I can't turn around and sell it for 80K because I'd be "raising the price by more than 15K"?
Roberth:
Plenty of mortgage lenders without seasoning requirements, eh? Great. Please list 3 for us including a phone number. In my 14 years as a licensed mortgage broker the only "lenders" that don't require property seasoning are hard-money lenders. In other words - can you say double-digit interest rates?
Thanks in advance Roberth!
Cornerdave,
What if you find a property that's selling below market value and you sell it back at fair market value. Would I be hanged?
Example, I buy a property for 120K, even though it appraised for 160K. I then sell it for 160K. Why do I need to hold the property for a year if the entire transaction is an arms-length transaction?
Property flipping is an issue if it is not an arms-length transaction. ie all the parties involved (broker, seller, appraiser) artificially inflate with a common intent to make profits from the transaction. If these conditions are not met, then it is not flipping.
It may be a location issue because I just spoke to my mortgage broker and she said that seasoning of the title is only an issue of you refinance, not if you sell. Not sure if that's for the State of PA or just for the lenders she does business with.
First Horizon is a no seasoning lender that is conforming
MtgMan,
There are several subprime lenders that require no seasoning and don't care if it is a sale or refi. American Broker Conduit, First guarantee, Mercantile
Some will go 100% n/o/o stated w/680 score. These deals have not been a problem for me at all.
CornerDave:
There are plenty of lenders out there you can submit to that will work with seasoning issues:
-Charter One
-Bridge Capital
-WaMU
-Greenpoint
The key to submitting your deals is having before and after pictures as well as comps to justify the re-sale....
I am not a mortgage broker, but I am closing deals each month on flips with conventional lenders.... Just submitting to the right ones!
Where is Tinman when we need her!
Best Riches,
Jeff Adam
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Quote:
On 2004-10-26 15:59, cornerdave wrote:
Roberth:
Plenty of mortgage lenders without seasoning requirements, eh? Great. Please list 3 for us including a phone number. In my 14 years as a licensed mortgage broker the only "lenders" that don't require property seasoning are hard-money lenders.
CornerDave - not sure what you're smoking but here's my list of lenders with no seasoning requirement to loan against appraised value:
Pinnacle
Fieldstone
1st Choice
PHM Financial
Rainland
Homecomings
Loan City
I just closed a rate and term refi with Homecomings on a property that an investor purchased 1 month ago. The rate for stated is 4.750%.
Because I have a purchase program that loans more than the purchase price for investment acquisitions, I have to refi loans like this a few times a week.
As long as you have a bullet proof appraisal and know what you're doing these are easy.
Ms. Lassite:
I dont think it is his fault! My lender had the same mentality until I broke it down to him. He then went and got approved with some lenders that did not have strict seasoning requirements and now I am using him for my deals that I flip!
I will put your list of lenders on my list. Maybe we can keep this thread going and make a master list lenders nationwide that dont have the seasoning requirements so we can all benefit from it! Maybe Joel can put up a list of nationwide lenders with no seasoning requirements!
Does anybody know of any other lenders that don't have the seasoning requirements...
Best Regards,
Jeff Adam
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Cnr Dave,
These no seasoning loans are done all the time! The key is you have to have a rock solid appraisal with interior photos of the property (3 Kitchen,3bath,etc) as well as a detailed report that accounts for the timeline and dollar amount of the
repairs/upgrades that were done. With the right lender these items answer any questions an underwriter may have in advance.