Overcoming The Seasoning Hurdle...

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Due to the feds cracking down on illegal flipping schemes (loan fraud), more and more lenders are hesitant to do legitimate simultaneous closings. Just wondering how our seasoned (pun intended) investors are dealing with this issue.

Some lenders will be more amenable to the idea with a second appraisal (to ensure there is no inflated purchase price).

I've also found that many lenders (not FHA) will skirt the issue if a Memorandum of Option (or equivalent) is recorded for at least 12 months prior to the closing. That helps to substantiate the lower initial purchase price and prove it was agreed upon a year earlier.

Anyone have any other ideas?

Comments(3)

  • tedlarsen19th October, 2004

    I haven't had to deal with this issue because in my state most of the loans are made through a state financed company that doesn't have seasoning rules, But a mortgage broker I work with suggested that if it ever became an issue I could make a L/O contract between the seller and my buyer. I still haven't figured out how I would get paid in this arrangement, especially without violating real estate broker licensing laws.

    any ideas there?

  • JR33316th January, 2005

    Is seasoning a problem in just some states. I live in California and have heard two contrary answers from the same lender!

    Any California investors successful in getting the subtenant/buyers financed without seasoning problems?

  • MissHelen16th January, 2005

    Just ran into this for the first time on a transaction, where seller had purchased less than 90 days. We are still working on getting it together. We had signed a contract and then the lender dropped the bomb. We are going to date the contract on day 91.

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