other lender’s are reacting to the hub bub of “illegal flipping” by requiring that 1. seller has owned for 6 to 12 months, and two that seller be on title for 6 to 12 months. This applies to refinacing as well as financing for resale. This situation is being bown totally out of proportion and will get worse before it gets better.
David
Yesterday I had something new happen to me. I was supposed to close a retail flip today but yesterday the buyers mtg. co., Countrywide, said they would not fund the deal because I hadn’t been on title for 6 months. I called the rep. and she said to fax her a letter of explanation and a copy of my HUD 1 with the original seller and she would try to get an exception.
I did this and today was told that no way, no how would they fund the deal.
In case you are int. here is my deal.
Buying for 102k
FMV of 127k after carpet, paint and some updates
Selling for 113k and I don’t have to touch it.
Countrywide said if I had done the fix-up and charged FMV to my buyers they wouldn’t have a problem. My buyers bought their current house the same way and did the fix-up themselves and saved some cash. Luckly I called one of the mtg. co. I use and we are going to get the deal done early next week.
I have just had a terrible experience with Countrywide and due to their incompetence have lost 6 weeks in marketing a property. They told me to go ahead and spend the cash that the loan was a sure thing. Finally my buyers had to pull their app. and go with Bank of America. T
I realize that there may not be enough profit in the deal listed above to do this, but if the profit margin were greater, would a note buyer also require this kind of seasoning? Or could you just owner finance & sell the note for cash at the table to a note buyer?
Vic
Typical, Especially With Countrywide IMHO - Posted by Hugh James
Posted by Hugh James on April 15, 2000 at 12:55:56:
We broker mortgages here in Chicago and stopped funding through Countrywide some time ago. Phil has an excellent idea here too. One thing is for sure…this Countrywide underwriter was out to lunch the day (s)he approved this loan, and sent it to QC and closing. No way they should have missed this in reviewing a title commitment, and that should have happened long before you got to the table.
Mike, A Co. by the name of American Brokers Conduit will do no owner seasoning sales. You may want to contact a mortgage broker in your area to see if they are signed up with them. They have a number of programs that may interest your buyer. Tom-Pa
It seems that more and more lenders are requiring this kind of seasoning. Looking at the positive here, why not just do a lease/ option for the 6 or 12 months and then sell.
The benefit is the tax treatment you will receive by renting and then selling in a year. You can benefit through a years worth of depreciation and the recapture for the depreciation I believe is only 25%.
Also by holding for that year your gain is taxed at 20% not as ordinary income such as 33% or more.
And of course by offering the lease/option, you make your property that much more marketable to more buyers.
My son just got qualified to buy a house to fix and sell with Countrywide. They told him he is required to keep the property for 12 months, and that they put that stipulation in their contract !
Re: Anyone ever have this problem with Countrywide? - Posted by mtgbrkfla
Posted by mtgbrkfla on April 15, 2000 at 06:55:41:
Countrywide is a new one to me. Usually when I have brokered a deal with an “A paper” buyer there has been little resistance from conventional lenders.
Subprime lenders on the other hand are terrified of “flips” and categorically refuse to fund them.
The problem is rampant fraud associated with “flips”. The honest investor is the one who gets hurt.
Some lenders actually stay away from deals in particular parts of the counrty like Baltimore and South Florida and Ft. Worth where there has been a bevy of bad deals.
It all comes back to bite the investor community.
Did you end up going with another “A paper” type Lender?