Posted by js-Indianapolis on September 11, 2003 at 24:28:22:
The final rule, “FR-4615 Prohibition of Property Flipping in HUD’s Single Family Mortgage Insurance Programs,” states in
The final rule, “FR-4615 Prohibition of Property Flipping in HUD’s Single Family Mortgage Insurance Programs,” Sec. 203.37a, “Sale of property” states:
“(a) Sale by owner of record. (1) Owner of record requirement. To be eligible for a mortgage insured by FHA, the property must be purchased from the owner of record and the transaction may not involve any sale
or assignment of the sales contract.”
You can read the full ruling here: http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/2003/03-10778.htm
No grey area there either. They covered earlier in the ruling that there is no longer ANY case by case basis where they will review to make exceptions.
Now, that’s the rule. We all know they are there for us to break. I can’t imagine why a seller or buyer would have a problem with rewriting the contract, and forgetting to tell HUD that there was an original contract that was scrapped in favor of a new one. The way I would proceed (never have, just thinking out loud) is to tell the seller you can’t buy it, as your friend wants it. I wouldn’t mention the assignment fee to the seller, unless for some unknown reason they ask. However, they probably don?t know that you can even assign, as 99.99% of the people in this country don?t. Heck, 99% don?t know what HUD is.
Anyhow, just tell the seller your friend really wants the house, and will fulfill every single obligation just as you were going to. The side deal, of course, is to draw up an assignment where your friend releases you from the contract, and agrees to pay $x,xxx. viola! HUD sees the one contract, you and your buddy are the only two in the know.
So much for rules.
Hey, I just noticed what might be a loophole. WOW! This is good. I?m going to post it to see what others might think. It?s HERE: http://www.creonline.com/wwwboard/messages/88612.html