Breaking HUD flipper rule

[Investment_Loans]

@DFWHoldings

Again, that’s also only a rule that anyone getting A-paper conventional financing would have to deal with. Sub-prime, self-insuring, portfolio and non-conforming lenders do not adhere to Fannie, Freddie or HUD guidelines.

Even with conforming products there is no rule that prevents it. All you have to do is to verify the reason for the increased price. Fannie, Freddie, HUD and VA do not prevent or even discourage ‘fix and sell’ properties. They are trying to discourage the ‘double closing’ or ‘flipping’ in the traditional sense of the word.

For instance, that rule you’re referring to is the same as the HUD rule. However, HUD allows for properties to be sold for greater than 20% more than they were purchased for as long as you can document what improvements have cause the subject property to increase in value. The improvements do not have to be dollar for dollar (i.e. if you put $5,000 into a house in repairs, you can increase the sales price more than the $5000 for it to make sense). If the property increases in value more than 20% but less than 100% the documentation needed is paid invoices or paid receipts for materials. The appraiser just has to comment on what improvements were done and how those improvements have affected the value of the home. If the sales price is 100% or more from the original purchase price within the last 12 months the requirement is to document the repairs and an independent appraisal ordered by the lender (a second appraisal, that cannot be paid for by the purchaser) to verify the subject property opinion of value byt he first appraiser.

These rules do not prevent anything that we currently do. What they are in place for is to prevent collusion between appraiser and interested parties to the transaction.

The 90 days, well that’s an arbitrary number that Fannie and HUD have come up with. It’s just based on the previous transaction date and the contract date not any other information in the file.

DFW,

What was being referenced with this is a Fannie Mae deed restriction. This restriction is on all Fannie Mae foreclosed properties for sale. This is not an underwriting guideline by any means. Basically, Fannie Mae is trying to hault the potential of fraud. No matter what type of loan is being used, conventional (fannie/freddie), alt-a, subprime…the investor can not take out a loan or sell for over 120% of what they initially paid.

[kdhastedt]

<<What was being referenced with this is a Fannie Mae deed restriction. This restriction is on all Fannie Mae foreclosed properties for sale. This is not an underwriting guideline by any means. Basically, Fannie Mae is trying to hault the potential of fraud. No matter what type of loan is being used, conventional (fannie/freddie), alt-a, subprime…the investor can not take out a loan or sell for over 120% of what they initially paid.>>

…for 90 days!

Keith

[DFWHoldings]

…removed by poster…

[Thoward]

I contacted a lady at the hud office about the two year thing and she said individuals are “expunged” from their records after that time. I find that hard to believe given that the time frames so short, BUT maybe you’re removed from the files that would set off a red flag…I wouldn’t test it though. the government kinda scares me when it comes to going after people.

[Bluemoon06]

I got Fannie Mae to waive the clause. They accepted my offer. It is a 2900 sqft house with 3 car garage. On the golf course about 1.5 miles from the lake. They accepted $90,000. My guess the AVF is $150,000 to $165,000 (my appraiser is going over tomorrow) It will take about $15,000 to get it into top shape. It should rent for around $1500/month.