Revisions to 90 Flip-Give and TAKE!!

As our mortgage broker at our office said, what the government giveth, the banks taketh away.

Apparently, someone at the bank didn't think that the 90 flip rule should be shared with regular Joe homeowner, only the banks should be allowed to move their inventory. Hence, we end up today with joint decision-making between some of the big banks like Wells Fargo, B of A, Chase, etc.) who determined that this will no longer pertain to individual sellers. And of course, these cats hold the purse strings because as FHA lenders, they determine who gets a loan and what those terms will be!

*Exemption was extended through 12-31-11. However, the investor decision is that this does not pertain to individuals who have purchased and are reselling a home within 90 days. This DOES include HUD REO's, Sales by Federal Agencies or federally chartered institutions and GSE's and approved non-profits.

*There are still overlays to the above approved purchases which usually means that these banks/investors will not purchase a property that has increased in value more than 20% or acquired within the last 90 days.

*In addition, if a property is being turned over between 91 and 180 days and the sales price is
100% or more over the price paid by the seller, a 2nd appraisal is required but at no additional charge to the borrower.

This all says to me, the layman, that once again, what is good for the government is not for us to use. Saving all the good stuff for themselves and leaving taxpayers to hold the bag! Sorry, but keep in mind, some of these distressed properties are still a great deal and deserve a once over!

Brooke

90 Day Flip Rule Takes a Vacation...

Recently the feds overturned the 90 day flip rule that requires sellers to "hold" onto a property for 90 days after the initial seller purchase regardless of whether they can sell the property in a shorter time period.

This move was pushed by the need to get the existing inventory of foreclosures reduced, therefore allowing potential investors to buy properties, do needed improvements and immediately put the property back on the market to sell. Over the past several years, this has not been possible, causing investors to hold back purchasing investment property because hanging onto the properties for 90+ days was just not financially reasonable.

Another consequence the 90 day rule was the impact of contractors losing work as a result of investors not needing projects on distressed properties. These jobs are part of the fuel for a healthy real estate economy.

There may be a glut of homes on the market but the majority need updates or minor repairs, something an investor can certainly handle with cash on hand. Unfortunately, the 90 day rule halted these small improvements in their tracks. Small projects can take less than a week and investors used to be able to get the home back on the market and sold quickly. Repairs and updates such as carpet, paint and minor cosmetics can help a property sell and keeps the buyers from having to come out of pocket with hard-to-get cash since down payment requirements are now larger and there are limitations on seller contributions. The ability for a seller to make these improvements on a recent purchase also helps to steady declining housing values.

All in all, the break will hopefully encourage investment, put contractors back on the job and remove the glut of foreclosures and distressed homes on the market.

Read the waiver from HUD
http://www.hud.gov/offices/hsg/sfh/currentwaiver.pdf

Want to get in on the action? Give me a call 336-817-3598 or shoot an email to me at brooke.cashion@allentate.com. There are some great opportunities out there and we look forward to assisting you in your real estate needs!

Brooke