It may work, but FHA is very picky. There was a lot of scamming in the 70’s between FHA and appraisers and investors, flipping properties back and forth with friends to raise sale prices, appraising pieces of junk for a lot of money, people in serious negative equity who couldn’t afford the houses to begin with, foreclosures, neighborhoods ruined,–bad stuff, so now they’re very particular about something changing hands too much. The above will probably work, I just thought some of their logic might be useful…or not.
I’m a few weeks away from closing on a lease/purchase deal and the mortgage broker I’m working with just raised a red flag. He indicated that since my buyers are getting an FHA loan and we are doing a double closing - I am purchasing from the owners and simultaneously selling to the buyer - FHA will not allow the sale.
Has anyone encountered this obstacle and, if so, how did you work around it?
Craig,
You said you are a “Few weeks” away from closing?
How close is that?
Are the sellers chomping at the bit to close, the buyers, and of course you?
If you don’t have one recorded, get to the sellers, explain that you have buyers, “Ready to go”, however, they need to obtain FHA funding.
This means, they need to buy directly from the title holder.
In order for the house to get sold, and their loan to payoff sooner, rather than later, they need to sign a performance mortgage with you, and a contract with the buyers, to sell the place.
This will allow you to get the title work done ASAP, and the closing set up.
Make sure your buyers are ready on all counts, except this issue.
When the sale takes place, you get paid as a lein holder, and title seasoning is not an issue at all.
Your lawyer should handle the paperwork for this, and perhaps even getting all parties to sign.
Get on this, take the bull by the horns.
This is when you get paid, and what for.
Your deal, you close it.
Do a google search, there are some free performance mortage samples online, which you can take to your attorney, to help them draft you one legal for your locale.
Re: Will FHA regulations prevent a double closing? - Posted by Jasonrei
Posted by Jasonrei on August 08, 2003 at 15:21:35:
I agree with Rick. FHA rules are spelled out well now. You can do a little searching on this website and find a link to the actual rule. 90 days or less is a no-go.
Posted by Rick(MD) on August 08, 2003 at 14:10:55:
Sorry Craig,
You gotta find a different loan. FHA will not insure this loan and even if it slips through the cracks, it could be serious trouble for all involved when it’s discovered later on. If you must go FHA it’s 90 day minimum before you can even enter into a contract with your buyer. Sorry for the bad news.
Re: No, they just mean change how you close! - Posted by jasonrei
Posted by jasonrei on August 08, 2003 at 23:14:18:
The rules may be clear, but I appreciate Jim’s idea. Perhaps this IS an alternative. I haven’t ever really thought about performance mortgages. what a neat little tool to be aware of and consider. thanks, Jim.
Because Craig will never be on the title. It’s going from seller to buyer, and Craig will just get paid in the middle without ever taking title. If he never takes title there is no seasoning issue.
You can’t sell, or change the title of a house, for 3 months if you HAVE an FHA loan, but can’t you buy a house that’s changed hands within 90 days with an FHA? That part I’m not sure of. The rules are spelled out, but weird things happen with FHA.
Posted by jasonrei on August 09, 2003 at 08:48:05:
Exactly, now hopefully this guy can get the sellers to accept a recorded lien on their property’s title. If they want a smooth close they should go for it.
(I have no experience w/ these kinds of mortgages, so don’t take my word for it)
It’s not “here sign this legal contract so I can put a lien on your home” … it’s “This is the paperwork to allow us to make this deal work. I’ll find a buyer and we’ll close the deal”. Something to that effect.