90 Day flip rule update

[Stephen McKee]

90 Day flip rule update!

After killing my self to find a solution I came to a solid conclusion. THERE IS NO WAY AROUND THE 90 DAY FLIP RULE!

As a matter of fact. It's even worse then you think.

1. Be sure you get a cashiers check dated the same date as the offer prior to opening escrow.

Even though FHA noes not require the check to be dated the same as the offer the underwriters do. They do not have a clear understanding of the guidelines and will kill the entire deal over the check. And don't think you can fix this mid escrow. The buyers are required to submit bank statments so any more money moving around looks bad. You have to start all over again.

2. Make sure every thing else in your lender package is dated 91 days or more after the recording date of your purchase.

If an underwriter has any knowledge of the transaction being put together before the 91 day mark they will kill the deal.

3. Require the lender use your appraiser. HVCC does not apply to FHA direct lenders.

This is more a conflict of interest issue than anything. If the lender uses your appraiser then you should have no dispute over the value. It was your appraiser after all. Be sure the appraiser you choose has the same view on the market you do and will defend your value to a review appraiser.

4. Any home sold within 90-180 days of your purchase date requires a second appraisal.

The lender will get the appraisers info on his/her conditions list. Be sure to pass that info along to your appraiser so he/she can contact the other appraiser if they are from out of the area. Also, leave a copy of the comps in your appraisal at the subject property for the second appraiser. This is not a violation of HVCC according to the VP of the Appraisal Institute.

[J Scott]

Stephen -

There are no hard and fixed rules about some of this stuff...a lot of it is going to be up to the specific underwriter you deal with, and some underwriters are going to be more lenient than others...

Some comments:

Originally posted by Stephen McKee:

After killing my self to find a solution I came to a solid conclusion. THERE IS NO WAY AROUND THE 90 DAY FLIP RULE!

The best way around it is to find a small, local bank in your area that can provide loans very similar to FHA loans, but without the seasoning rule. Find one of these banks, and require that all your buyers fund through them.

You'll never have to deal with another FHA loan again...

If an underwriter has any knowledge of the transaction being put together before the 91 day mark they will kill the deal.

Some underwriters don't mind the process getting started earlier than 91 days. In fact, all our loans are done with the same FHA underwriter (through the broker we use), and he's fine with the getting the process started early.

We generally get the buyers approved and the appraisals done within a week of the offer, then sit back until Day 91 comes. At that point, we get signatures, earnest money and start underwriting. We can close by Day 98 if things go smoothly.

3. Require the lender use your appraiser. HVCC does not apply to FHA direct lenders.

Some lenders will require that the appraiser be taken from their approved list. If you have an appraiser that is on their approved list, you can generally use him.

Then again, some lenders are requiring brokers to use third-party management companies, so you'll have no option to select the appraiser.

And then there are some lenders who don't really care who does the appraisal, and you'll be free to use your appraiser.

We have a list of appraisers that we use who span the gamut of lender approved lists, so we can often use one of our own. But, occasionally, the lender will want to go through a management company for the appraisal.

4. Any home sold within 90-180 days of your purchase date requires a second appraisal.

Again, this will depend on the underwriter.

Generally, if you're selling the property for more than 100% over what you bought it for within 180 days, you will be required to provide additional proof of value, which is often done via a second appraisal.

But for sales less than 100% over previous purchase price, plenty of underwriters will only require a single appraisal.

Be sure to pass that info along to your appraiser so he/she can contact the other appraiser if they are from out of the area. Also, leave a copy of the comps in your appraisal at the subject property for the second appraiser.

Better yet, don't ever let an appraiser through your door without you there with him. We will put a portable alarm unit on all our properties so that the appraiser will have to call our agent (my wife) to get into the property.

We'll meet him there, hand him a copy of the comps we have (and a copy of a previous appraisal if there was one), we'll hand him our renovations list, and a renovations budget, so he knows the work we did and how much we spent.