Major banks have stopped double closings 07/01/02 - Posted by Frank Ross

Posted by Matthew on July 20, 2002 at 15:56:10:

thanks for that. I too have been flipping through fha lenders for years.I am glad you firmed that they have not implemented such a change. I heard as well they(HUD) was going to start requiring the lenders to service the paper for 12 mos but that hasn’t affected my business.yet

Major banks have stopped double closings 07/01/02 - Posted by Frank Ross

Posted by Frank Ross on July 20, 2002 at 08:51:34:

It is time to look at what is going on. I posted, “have banks stopped flips?” on the financing forum. Willis Smith posted on this board “Freddie Mac” almost the same thing, the answer he got was do a double close. Kristine-CA posted “No Simultanteous/Double Close w/Countrywide” the fraud dept told her policy is no double closings.
I was told by two REO real estate agents that I would have to close or no deal. At that time I thought it was because I do not have the credit to close, but people that is not what happened on July 1, 2002. Banks have stopped double closures, both for selling REO’s and financing houses.
All of this is directly a reaction of the new Hud policy on seasoning. If you think it will not cause you to lose deals, think again. Your time and clients will be lost, no one is going to tell you until after the fact, why your deal was lost. Hud will not honor any deal with less than a year ownership, banks are now honoring that policy, both on sales and financing.
I know there are other ways to get around these policies, but I don’t know what will keep me from facing the fraud dept on any deal. They say full disclosure, but think about
a displeased buyer that makes the statement to the fraud dept, I didn’t know what he/she was doing cost me so much, or I’ve been had. You should be able to prove you did nothing wrong, but at what cost, loss of deal is nothing, compaired to your reputation.
If anyone can prove I am wrong, please do so.
I will gladly eat crow, wake up and get the juices flowing.
Spend the time to prove me wrong. I need help, and so do you.

Frank Ross

Major banks have stopped double closings 07/01/02 - Posted by Kristy-AZ

Posted by Kristy-AZ on July 21, 2002 at 24:32:11:

I had something happen to one of my deals. This was back in January. We bought a house at foreclosure, fixed it up and put it on the market. the buyers got a new FHA loan. When the appraisal was ordered, The APPRAISER called the other agent and told him that he could not bring the house in at the sales price that was being asked because it was a “Flip House”. He said he would need reciepts totaling the amount between what we had paid for the house and what we were asking for the house. I personally called the Appraiser and talked with him. He said it was an FHA guideline and the house had to be seasoned for 6 months. He said he would not touch the appraisal with a 10ft pole.

I immediatly called the bank and told them to find another appraiser or I would find one for them. The lender got another appraiser and we closed the deal 2 weeks later.

My point is there are some companies that will be strict, but you can always find someone to come through.

Re: Major banks have stopped double - Posted by Rob FL

Posted by Rob FL on July 20, 2002 at 11:39:22:

I can speak for anyone else, but I acting as a Realtor, just closed a transaction during the first week of July. Countrywide made the FHA loan.

The seller had bought the property for about 95K in September 2001. The new buyer paid 109,900. It appraised and the FHA loan closed.

So Countrywide and FHA’s fraud department didn’t ax that one for lack of seasoning.

The end of flipping as we know it? - Posted by Kristine-CA

Posted by Kristine-CA on July 20, 2002 at 10:54:03:

Frank: while I can see your concerns about seasoning issues, I don’t think flipping as we know it is coming to an end. I don’t know of any FHA policy that states seasoning must occur.

In Countrywide’s case, they told me, in addition to fraud concerns, that since they sell their mortgages at a discount, in bulk, they will lose money if the borrower pays it off. What is silly here, is that 1) I had assigned my contract so there was no loan issue and no double close issue and 2)they should really be checking out the motivations/plans of my buyer (their borrower) if they want to protect their profits. He will most likely resell within the year. They know that it is an investment property and they have no pre-payment penalty. What are they thinking? Are they thinking?

No double close sounds dramatic, but it’s not. In my case it might mean having to close on properties before reselling. I don’t prefer that, but there is always a way to borrow money for a couple of hours. :slight_smile: More costs, less profits. But certainly not the end of my flipping career.

Sincerely, Kristine

Re:Banks have stopped double closings 07/02 - Posted by BIGDADDY(MD)

Posted by BIGDADDY(MD) on July 20, 2002 at 10:19:14:

You say that HUD’s new policy is not to honor anything held for less than one year buy the seller. I am fimiliar with the talk of such a policy being implimented because I addressed the issue directly with HUD several months back. They were soliciting responses to such a potential change in their underwriting policies. At that point they were only considering it being a 6 month period that a seller would have to hold the property prior to resale along with some other language that would allow them do a flip, just not the rest of the profit making world. Funny how the government wanted to make sure that they could do exactly what they were thinking of trying to stop us from doing (FLIPPING). Well needless to say I have yet to read any formal changes in policy or directive put out about a SEASONING time period of any sort. I should state that I do resales that are typically done within two months (sometines longer, sometimes shorter) of me taking possesion of a property and that every person I have sold to we send through a FHA lender that we have dealt with for quite some time. So, I guess the point that I am trying to make is that if what you say is true then why are my loans being funded with FHA backing? Now I am not saying that you are wrong but I can tell you what I have learned over the years and that is this, if the lender that you are dealing with is telling you that HUD has implemented this new policy change I would ask him if he could tell you, what document they received from FHA,(It would normally be posted in the Federal Register), and if he could provide you with a copy of it. Now, what I have found with a lot of these policy changes is that they are self directed, meaning that it is an in house policy change implemented by that particular institution. So, if you could direct me to where I could find that FHA imposed underwriting guideline change I would be most greatful because I would love to read it for myself and to show it to the three different FHA lenders that I deal with on a regular basis. I hope that this helped you and that you can enlighten me.
Thank you for you time.