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FHA 90 day rule, it has issues...

By
Real Estate Broker/Owner with Complete Realty, LLC

The FHA 90 day flip rule is hampering business.  2 reasons to start with...

1.  I don't know how other states work, in MI we have to file a Principle Property Exemption form by May 1st or the property taxes go up as being non-homestead.

I listed a beautiful home that is a flip home.  I have had 2 people want to write offers but backed away when they learned the FHA rule.  This home can not sell FHA until 050408.  Their taxes will more than double if they purchase this home. 

I can't even look at a FHA offer until 5/4/08, that's 4 days past the property tax file time.

2.  Even if MI changes the tax rule, that home can't be sold until 050408, the purchasers may find another home before then.  The seller again lost the purchaser because they had to wait 90 days.

Granholm passed a bill which allows 2 Principle Residence Exemptions as long as the sellers move, the former home is listed for sale and vacant.  This is great for owner sellers.  This bill allows this action for 1-3 years.

Flippers are fixing up neighborhoods, creating movement in the economy and getting punished for doing so.

How does this rule get changed?????

Anonymous
Denise in AZ

I hear you,  I have a beautiful listing (flip) that my investor bought and did a fine job of restoring, I get a call on this listing practically every day, we now have a serious buyer who wants to place an offer, and are afraid that he will find something else prior to the '90' days. 

This really doesn't make any sense, that waiver they just implented should have applied to EVERYONE, not just lenders.

Jul 15, 2008 11:36 AM
#1
Richard Glesser
North Country Appraisal Services - Gaylord, MI

According to a blog in the True Mortgage Professionals group, FHA suspended the 90-day rule today.  May want to go there and check it out.  Pros and cons to both sides of this.  I believe it can be good in rebuilding neighborhoods so long as values aren't inflated and flips don't repeat on the same properties.

Jul 15, 2008 03:11 PM
Roland Woodworth
Blue Cord Realty - Clarksville, TN
Blue Cord Realty

Angie: I just experianced this in TN... maybe a little different... I have a buyer buying a house and a vacant lot next door....... two different owners...... FHA won't allow the owner of the house to purchase and sell the lot with the house unless it was owned for 30 days... Grrrr

Jul 26, 2008 06:46 PM
Lynn Afton
Greenridge Realty Oakmont - Big Rapids, MI
REALTOR® Near Big Rapids, MI, Mecosta County

We need to change the Michigan homestead exemption to be prorated to whatever date a buyer purchases the home.  See my link http://activerain.com/blogsview/607962/Pro-rate-the-Michigan

which tells what everyone in Michigan can do to help.  I think MAR should add this to their priority list.  It's good for buyers and it's good for Realtors.

Jul 27, 2008 05:37 AM
Mark Ryan
Mark Ryan Group / Re/Max Victory - Dayton, OH
Broker, CRS, ABR, CDPE

Dont know about all the MI taxes but the 90 rule you are talking about, I think... is the "flipping" rule that says you can not buy a home FHA unless it is "seasoned" for 90 days...

  1. I would not think that would be a big deal most of the time as that gives them 60 days to fix it up and get an offer.  Then 30 days for the buyer to finalize their loan.
  2. If they are flipping quicker than that are they really doing anything to the property???
  3. The rule in no longer in place... So this is all academic...

I would check with the lender/LO you use and see if they agree.  If not, get a new LO...

Hope this helps...

Jul 27, 2008 05:48 PM
Virginia Tatseos
Stage-Show-Sell - Bloomfield Township, MI

Reading your posts keeps me up to date on Michigan RE

Jul 29, 2008 07:18 AM
Angie Ridley
Complete Realty, LLC - Flint, MI
Broker, ABR, CRS, PMN, WCR, At Home With Diversity

Richard, do you have the link to the article? I attempted to find it, there are just so many post.  Thanks...

I would love to see the homestead excemption changed also!!!

 

Aug 11, 2008 02:44 PM
Anonymous
Scott

You need to check your FHA guides....the 90 day rule is in effect, except for forclosures, ie bank sales. All others still apply to the 90 day rule.

I have one right now also, it makes no sense to wait, rates could go up, guidlines could change in the mean time...

 

Sep 17, 2008 08:11 AM
#9
Evelyn Johnston
Friends & Neighbors Real Estate - Elkhart, IN
The People You Know, Like and Trust!

I think with the government take-over this rule may lengthen, instead of shorten.  Then we would crush the independent flipper.

Sep 17, 2008 11:23 PM