All Forum Posts by: Ben Carmona

PM sent for more specifics.

CC,

Your topic pertains to seller seasoning. Your buyer must let his bank or mortgage professional know the length of time you've been on title. These are questions that the should be asked by whomever is doing the loan but unfortunately do not; only later to cause problems during underwriting.

Most A paper lenders offer 2 types of programs, conventional (conforming) and ALT-A (portfolio). Conventional loans follow Fannie Mae/Freddie Mac guidelines. Those guidelines do not have any seller seasoning restriction. However, sometimes the lender themself may take a more conservative approach by limiting this to ~90 days. The underwriter must see that the reason for the increase. As John explained, the appraiser must show it was purchased below market value and/or rehabbed. Your scenario would not fit under these guidelines because of the loan size.

In that case, an Alt A loan may be required. These loans are written to guidelines from other investors on WallStreet and there are a # of them. A lender may have several AltA programs each being sold off to a different end investor. The guidelines can be different for each of them. Majority of these programs will have a 90 day seller seasoning period, some at 6 months, and a couple with no seasoning requirement.

Double closes are being looking at a little closer by some lenders. Typically, a lender's closing department reviews title and home owners insurance after the underwriter has approved off on a borrower's credit, financial strength, and appraisal. The lender's closing department generally needs about 24-48 hours to review and work up docs before the closing can happen. Because the closer is not as proficient in determining sesoning time, as would it be an underwriter, double closes have gone through succesfully. In a double closing, the title company has to be cooperative in showing the borrower's lender a title report that the seller is already on title.

Even lenders with no seasoning period still need you to be on title for at least a couple days. This way, the title company can really show that you closed and would give the lender enough time to evaluate the deal.
As I said before, some lenders are starting to change their practices to have the underwiter take a closer look at the title during their approval process.

You'll have plenty of other investors tell you though that double closing are completely fine. I've run the scenario by MULTIPLE lenders and each has told me that it's not a practice that they like to participate in, with the exception of private money or hard money lenders.

Plaurent

Welcome!

There will be plenty of options available to you here in the US market. Over the last year I have been working directly with Australian and UK investors who are purchasing 1-4 unit investment properties here in the US. These loans are offered through wholesale lenders and are conventional terms, typically 20% down. As John noted, VISA status will not be a huge factor. Even having no US SS# or credit will not be a factor. The lenders will either pull an international credit report or use letters from banks in France that you have a relationship with. These are great loans for long term rentals. Maybe not so good for your goal of doing fix and flip as these lenders prefer that you keep the loan on their books for at least months. Many times, fix/flip deals have properties that are in below average condition. The wholesale lenders will not make loans on those types of properties. It has to be in average habital condition. (no broken windows, functioning bathrooms/kitchens, etc).

The type of loan that you would need for this kind property would be more commercially oriented. Something like a rehab loan that would based upon future value and would cover the purchase, fix up, costs, and sometimes payments. Of course, these tend to be a bit higher in terms because of the associated higher risk. There are a couple lenders that I know of that entertain working with foreign nationals or non perminant residents on loans like that.

I'd love to hear about the investments you've done in France. Maybe we could catch up sometime.

To Our Success!

Great first post!

There are several sources for hard money rehab loans. You may not even need a hard money rehab loan though. A conventional rehab loan may work.

Here's a break down of some options that may be possible:

Coventional rehab loan
80% arv - rate <12%, 4pts

HML Options
80% arv 12-15%, 4pts
65% arv 18% 0pts
70% arv 15% 3pts

You may also have some other options depending on your available equity from other properties.

You're welcomed, I'll PM you too.

I agree with Scott...stop, drop, and roll on out of there.

1. Professionals know how to communicate. Whether it's good or bad. Not every loan goes perfectly so it our jobs as consultants to effectively update parties involved. Everyone can be affected by delays or denials. For example, when I interviewed my processing staff, I had many questions related to communication and her follow up methods. She is an extension of my services so it had to be up to par with my overall "mission statement" (see website). Within my voicemail I specifically ask what period of the day is best for me to return their call, morning, noon, or evening. I'll usually spend three periods througout the day doing this unless something seems to be an emergency and needs to be addressed immediately. Emails are even quicker, normally within the 1/2 hour since God's blessed us with the technology of the Treo (mobile emails). Those I just want to get cleared and out of my inbox.

2. When I hear the words "slam dunk" I become very skeptical. In todays market there are very few things that fit perfectly within the lender's guidelines. Usually that requires full doc loans where the borrower is putting down a good size down payment, not always though. Most investment loans seem to be needing "niche" products which have so many specific guidelines. There are a dozen questions in addition to the normal application data that need to be address upfront. Most the times even with all this data I'll spend a day or so contacting the lender's underwriters to double check or ask advice. Scott's estimate of about 72 hours is a fair time frame for professionals to do the due dillegence for you.

You have the right to choose another lending source. Who knows if the person is even giving you fair term. That would be terrible to be overcharged in addition to being treated unfairly. I'd also recommend tyring to contact the department manager.

Since you plan to hold the properties for an indefinite time then you may want to stay away from using the equity in your primary property. Having a heloc is not a bad choice if you utilize correctly; like for situations where you'd be able to pay it back quickly.

The wholesale lenders that we use as brokers will typically require that you have your down payment money plus also some cash reserves equivalient to 6 months of the expected mortgage payment including taxes and insurance.

So using the $15,000 you have you'd need to calculate some scenarios on how to best use that. There are lenders that offer 100% financing of the purchase price. You'd have to qualify with full documentation of income and assets. The lender would allow 75% of the subject's rent to be added to your income. If your not drowning in debt as you say, then you may be able to qualify for this option. The rate can be high but if you're finding a great property below market value then it may still cash flow. Using a 90 or 95% option is not a bad idea either for properties that require better cash flow. Just remember though that any money used for down payment takes away from your reserve requirements that must be met.

With your score, you'll have many options. Some lenders dont even require reserves, this may allow for larger purchases when choosing to put down money. Employment history and income need to be evaluated to really help make a great recommendation.

What has your mortgage professional advised? If you are not working with anyone I'd suggest teaming up with a nationwide mortgage consultant who specializes in investment loans such as these.

TX has many HML. Many have very relaxed guidelines for qualifying.

All base there loan on the arv and will include funds for purchase, fix up, costs, and sometimes payments.

I'll send over a list of questions so we can see which lender works best for you.

So you need a short term rehab loan based upon the after repaired value that covers purchase, fix up, costs, and is based on equity rather than income/assets?

I may have a couple sources for you depending on the area.

Will send you a PM.

There are only a couple conventional lenders that offer 100% financing now. Many have changed their parameters over the last couple months. Most underwrite to the same guidelines put out by the same end investor who buys these loans.

One of the biggest hurdles now is their landlord experience requirement. In the past, they'd allow for 2 properties to be purchased in a 6 month period or 4 in a 24 month period. This could sometimes be over looked if they could show other positive factoring contributions. The new guidelines state that if the ltv/cltv is over 80% that the borrower has to have owned 50% of their properties for at least 2 years. (including the subject).

For example, as I was informed by the lenders account executive (but still verfiying with underwriting management)
1. First Time Home Buyer - wouldn't qualify unless had own PRIMARY for at least 24 months. (owning an investment without primary doesnt count)
2. Owns a primary for over 24 months and 1 investment property for 6 months. Wouldn't qualify for another until he owned the first investment for a full 24 months.
3. Owns a primary for 24 months, owns 3 investments for over 24 months, but just bought 4 other properties over the last 12 months. The new subject purchase wouldnt qualify.

Most reduced doc high ltv loans have vanished as well.

FYI - Full Doc requires that you have at least 6 months of the expected mortgage payment, inlcuding taxes/insurance, verifiiable in liquid assets seasoned for 60 days.