Seasoning Flipped Properties
I oought a forclosure property for $68,000 and sold it to a couple for $85,000. They went to www.Lendingtree.com to get a loan and the company they chose would not issue a morgage because I was flipping to property and makeing "too much profit" At least that is what they told me. The deal fell through.
They said that the bank requires ownership for 6 months on flipped properties.
Has anyone dealt with this issue before and how much of a problem is "seasoning" and is there anyway around this.
Thanks
This one gets posted so often. . . . .
Just browse through the old forums or do a forum search with the word "seasoning" and you will get a host of complaints, suggestions, and techniques.
You should find a good mortage broker to work with that can find you lenders that dont have as strengent seasoning requirments if you are going to be flipping properties. Then you can also get a percentage of the points charged on the loan by initiating it.
Best of luck,
James
Dr. Hopwood:
This is one reason you should simply
"Assign" properties rather than close in your name and try to resell again. My recommendation would be to find a lender as mentioned above that does not have any "seasoning" requirements.
One other thing you could do is have your
new buyers put a private investor loan on the property or a "B" lender type loan on the property if they really want it and turn around and refinance it once it is in their name. You could even let them assume your loan "subject to" and carry back a second and then have them do a refi once it is in their name. You can get this deal done if you are creative.
Best Riches,
Jeffrey Adam[ Edited by JeffreyAdam on Date 04/24/2004 ]
Nine times out of ten, it is the loan officers fault. They try to get the buyer into a program that they don't qualify for. That is the biggest problem with flipping properties without having a strong support group on your side.
You should get a banker or broker that you can refer people to. this will allow you to get the max sale price and the person doing the loan will not be so lazy. They will want to find programs out there for your buyers.
Seasoning issues seem to be what loan officers are using for their incompentance. There are no set laws on this issue, just guidelines. Most loan officers do not take the time to explore other avenues. They just want the easy deals.
Don't be discouraged, look for a good broker or lender near you.
Lori
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Seasoning issues seem to be what loan officers are using for their incompentance.
This is 100% dead wrong. Seasoning requirements are real. A LO that says this is most likely not just making up an excuse. The LO should have used a lender that accepts these types of situations, granted. However, it may also be the seller's fault for not making this fact well- and clearly-known.
Quote:
There are no set laws on this issue, just guidelines.
Underwriters make decisions based on company policy, not necessarily on law. Non-conforming lenders can choose not to lend money for any reason at all.
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Most loan officers do not take the time to explore other avenues. They just want the easy deals.
Truthfully, most LOs don't understand the finer points of investment lending, just as most Realtors don't understand investment real estate transactions. A wise investor either chooses their people well, or chooses to train their people well.
It is important to have an LO who knows which underwriters will waive seasoning requirements, and what they need from you to do so.
Remember: to be successful, you must take final responsibility for every aspect of your project. It is not the LO's fault for being uneducated in these transactions, it is your fault for choosing an uneducated LO, and then choosing not to train them.
:-D [ Edited by JasonTaylor on Date 04/29/2004 ]
Jason,
Excellent point. I network with many investors who also don't understand what they are getting into. I had one investor who bought a house, signed a contract to sell to one of my buyers, then realized they missed something on the repairs and called me and said " We need to get another $10K from the buyer" Guess what the house wasn't worth another 10K. They still have the house. (since nov 2003)
That is why as investors we must have a team of experienced people on our side. I was not blaming the loan officer, I was stating a fact many loan officers think just because one bank says "it doesn't meet our seasoning requirements" that the loan is DEAD. We need to find people that want to work. That is the hardest part about being an investor, Finding the right team.
Lori
PS
I am speaking from experience, I have been in financing since 1987, in every department .
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