Looks like FHA is going to play nice and wave the 90 day flip rule again for 2011.
Below are general guidelines that HUD uses to identify properties that are exempt from the 90 day rule. As I mentioned, some banks have adopted this criteria as well. Others may not be willing to loan, period.
1-All transaction must be an arms-length loan with no identity of interest between the buyer and seller or other parties involved.
2-The property cannot have a pattern of previous flipping in the past 12 months (One previous flip a year people!)
3-If the seller is earning more than 20% of what they originally purchased the property for, then the lender has to justify the markup with information about renovation OR a second appraisal.
If you recall in my previous posting about this, many banks have adopted this same criteria for their loans and it becomes a problem when no one bothers asking the seller if they have owned the property for more than 90 days.
What this means to the team is that we all have to wait to fund the loan (occurs one business day prior to or on the day of recording) until the seller has a history of owning the property for 90 days! Types of sellers who might be in this situation would be REO and investment flippers.
Buyer and Seller agents should be pre-emptive and avoid unnecessary/unanticipated delays in close.
1-Listing agent should always ASK the seller if they have owned the property for more than 90 days.
2-Buyer Agent should always ASK the listing agent if the seller has owned for property for more than 90 days.