Posts Tagged ‘short sales’

Jarad here and there is some BIG NEWS today.

FHA announced that they have suspended their 90 day rule beginning 2/1/10. This is beyond huge for investors because we can now sell properties to FHA buyers without having to season the title for 90 days.

There is a HUGE inventory of FHA buyers, in fact most first time home buyers use FHA because of the simpler lending requirements and lower down payments. And since a lot of deals we are seeing are entry level homes it makes for a perfect fit.

See it was difficult there for a little while because FHA refused to finance a deal if the seller was not on title for at least 90 days or longer which prevented a ton of first time home buyers from getting into these entry level homes at affordable prices.

Now finally after 4 years they decided to lift that requirement, with a few minor exceptions like…

All transactions must be arms-length, with no identity of interest between the buyer and seller…

And the seller has to be on title at the time of close… etc. you can read about the waiver on HUD’s website.

This means anything is fair game now, Short Sales, REO’s, you name it!

So go out and start flipping those deals, you have no excuse now.

Question: When closing short sales and finding a buyer in 30 days or less, are you using a land trust to avoid the seasoning issues or are you double closing in your own name? How do you avoid the seasoning issues?

Answer: -It’s becoming harder and harder to perform a double or simultaneous closing because of all the mortgage fraud going on in the lending industry. However, there are a few title companies still around in certain states that will do this for you, you just have to find them. The land trust is used to provide added protection and helps in avoiding the due on sale clause. So using a land trust is beneficial even if you can’t perform a double closing. The most common seasoning issues come when you buy a piece of real estate for $100,000 one week and sell it for $200,000 the next. They begin to wonder how it doubled in price so quickly and you or your end buyer may have to explain that you got a good deal.