I wanted to know how some of you seasoned investors get around title seasoning issues when doing double closings on wholesale or flipping deals. How does title work in this matter. I was under the impression that when you do a double closing that: The original seller sells the property to you (title goes to you temporarily), and you than sell the property to your end buyer (title now goes to the end buyer). Could someone explain how you get around title seasoning?
You need to find out where your buyer is getting their financing from. Some recommend that you have a hard money lender lined up so that your buyer can use them. That way you stay in control of the process.
For anyone who has double closed lately…
What lenders do not have seasoning issues?
Are there any left?? :banghead
I have a few short sales with offers coming and I am afraid that I will not find a lender that has no title seasoning issues so I can double close.
What has been your experience in finding your buyer a lender to double close with?
I do double closes all day. They scare the sh*t out of conventional lenders. You almost certainly need to get your end buyer qualified with hard money. The biggest problem, when I have been naive enough to let some of my investors look at conventional financing, is that mortgage brokers are salesmen and are trying like hell to get it done and when underwriting sees you are selling something you don’t own they get freaked out and kill the deal 2 days before closing. Mortgage brokers may or may not see this coming and deny it or it might smack them out of the blue. Whatever the situation this is a problem that blows up a deal spectacularly.
I agree with Monte. Try to stay away from conventional lenders. If it is a conventional lender, then talk to your title company. A good one could probably work it out such that the lenders don’t care.
I have a few title companies in my area that are comfortable with double closings and my end buyer funding my purchase in the 1st side of the closing. The problem is that the lender’s underwriter sees that my company is not on title and the red flag goes up. My title company doesn’t seem to know what to do then.
A good one could probably work it out such that the lenders don't care.What could they do to have the lender not care about title seasoning?
My experience with hard money lenders is they CHARGE 10% of LTV(loans 65-70% of ARP & they tell me the fees will go down after mulitple deals from 10/8/6/5or4) & 12% Interest for 3-6 months.
What buyer wants to pay fees like that?
Do you have HMLs that charge a more reasonable amount in The Milwaukee, WI Metro area?
In my situation, the lender’s underwriter did not see my company’s name on title either. My Title Company handled it b/c they say they do that all the time.
Do it as an assignment, no need to do a double close. You just need to find the right title company for that.
Definitely use a hard money lender to guarantee the close. Investors Mortgage Lending is a good one I have delt with a lot.
Having been a loan officer in my past life for a conventional lender, I have a different take on this subject…
It’s usually not the “lender” per se that requires title seasoning, its whatever the underwriting guidelines of the loan product itself… and lenders have many, many loan products usually. Each loan product can be sold off to different buyers in the secondary market so the u/w guidelines will be different.
We had plenty of conventional loan products that didn’t require title chain. If the product doesn’t require it, the underwriters don’t ask for it, and the loan processor doesn’t collect it. Usually, the loan products that didn’t require title chain were those where it was easier for good credit buyers to qualify with the best rate. If your buyer has a 680+ score, then it is likely they can get conventional financing without title chain requirement. Some may even go as low as 620 (perhaps not anymore with today’s tightened credit market???).
So, don’t throw away the ideal of conventional financing. If you are a wholesaler and your buyer’s are usually owner-occupants, go talk to 3-5 loan officer (banks and brokers), spend an hour at lunch with each of them and ask them about loan programs/underwriting guidelines that don’t require title chain. You are potentially a steady stream of referral business to that loan officer so they will make time for you.
A lot of this may not pertain if you only wholesale junkers. If you also wholesale pretty houses (or even nice homes that need a bit of rehab), conventional loans are still an option.
I would suggest asking people at your local REIA for closing recommendations…people are doing double-closings everywhere… you just need to ask the right people where that is.
The way that I deal with title seasoning issues is by brokering the loan directly to the BANK I am using. If I close it in-house we require a chain of title to sell the loan to the end investor. If I send it to the bank directly they do not ask for the chain of title because typically all they care about is qualifying the buyer. They will be holding the servicing rights so as long as they feel the buyer is qualified they don’t care about chain of title. Assigning the contract is a whole different story. Lenders are catching on to the “and or assigns” clause and giving it the big fat thumbs down. Hope this helps.