You need an attorney. Many thousands of dollars from now you won’t be thinking about what the attorney would have cost. You’ll be thinking about what the absence of an attorney cost you. I don’t see how any lender can dictate the terms (other than what they will loan) of a sale. I’ve never heard of a lender setting a sale price. The “chain of title” as they call shouldn’t be anything more than determining the rightful owner- or the person with the equitable interest- is the one doing the selling. If you haven’t established legal equitable title to the property- you may have no right to sell it. This could be what they mean by “flips” being against the guidelines. You have to be careful on flips where you sell-before-you-buy. These can be done, but the legal issues are many. Best Wishes,
I bought a property for 90,000 a week ago. I have a buyer for the property for 114,000. The lender wants a 12 month chain of title and are insisting that I sell the property for the same price i bought the property for. They are saying that a flips are against FNMA & FDMC guidelines. I have even went non- conforming but to no avail. I had the property quit claimed to me but i now have the 90,000 under lying mortgage due. Whay can I do?
OK This is how I understand it. - Posted by Glen SoCal
Posted by Glen SoCal on March 13, 2002 at 01:39:02:
First of all, find another lender or locate someone like ED Garcia here on CRE.
Flips are not against FNMA guidelines. What the hoopla is all about is avoidance of FNMA holding the bag for a property in foreclosure with a previously inflated appraisal duping them into granting the loan on the unworthy property in the first place.
What you have to do is simply justify your price. If the prior owners were in financial distress and sold cheaply, there is your justification for a higher price. If you did a lot of rehab and can show before and after pictures and accompany that with receipts, you again have justification.
You can do a google search on this topic. You will find all this info. Print it out, highlight the parts that will educate your lender.
If you do an installment sale you can be taxed by the gov. for the full amount in the first year if they identify you as a dealer. And flipping this property in one week kind of looks like a deal.
There have been posts here suggesting that you do your deals in an LLC so you don’t contaminate your passive (long term rental/holdings) investments.
I’ve never done any of this stuff myself so check my facts.
How about this, get $5000 down from your buyer. Lease the house with an option to buy it in one year. Set the payments $150 to $250 over your monthly payment. You get the up front money and the difference between what you collect and what you pay every month. At the end of 12 months have your buyers get a new loan and cash you out.
Re: I can’t sell my property! - Posted by Craig (IL)
Posted by Craig (IL) on March 12, 2002 at 21:44:16:
Selling l/o gets around that problem. No, the lender isn’t dictating the sale price, but any lender can decide how much he is willing to lend. Don’t accept your buyer’s offer of 90K.
A second option could be to finance the sale yourself via CFD or Land Contract (which ever its called in your area). In either case your goal would simply be to structure the deal so that you get enough as a downpayment/option consideration to cover your upfront costs and a positive cash flow for a year or so until the buyer can cash you out. In 6 months or one year there will be no seasoning issue.