Attention all real estate investors and buyers trying to buy homes from real estate flippers:

Most mortgage lenders now have strict guidelines when it comes to title seasoning.  Title seasoning is determined based on how long the seller has been in title to the current property.  If a seller has been on the title of the property for a very short period of time and now is trying to re-sell the property, banks will require the home to be title seasoned. 

A lot of people ask why a bank would care.  Well let me try and answer that question.  The mortgage lender cares because not enough time has passed to truly verify that the home value is holding, declining or appreciating.  Mortgage lenders today do not want to take the risk of the unknown so they feel that title seasoning helps protect them from this risk.  Now if you agree or disagree with the mortgage lender, that is not going to change the fact that they are now requiring this as a condition.  

Here are some good indicators with mortgage seasoning:

1.  FHA loans do require a 90 day title seasoning.  A purchase contract cannot be written until the title is seasoned beyond the 91st day.  Day 92 is the best time to execute the new contract. 

2.  On refinance transactions, most investors require at least 6 months title seasoning.

3.  VA does not have title seasoning, but the end investor who purchases the loan may have title seasoning.  For example, if I have a client who wants to go VA, I place the loan to be sold to investor A and they require 60 day title seasoning, and the title has only been seasoned for 15 days, then this loan will not work.  But if investor B requires only 1 day title seasoning, then we would also be ok.

4.  USDA does not have title seasoning, but again the end investor may require this. 

5.  Most private mortgage insurance providers also require title seasoning.  Let's say you have a conventional borrower who is putting 10% down and investor B only requires 1 day title seasoning. You may think we are going to be able to do this loan, but the PMI company who has to approve the loan will not let you do the loan unless the title has been seasoned by their guidelines.

6.  Not all banks get their money from the same place.  So depending on the bank you talk to, they may have more or less flexibility with this issue. 

 When it comes to finding a mortgage lender to choose from with this issue, I personally believe you need to seek out a mortgage professional that can offer you as much flexibility as possible.