Seasoning Question - Posted by Hugo

Posted by Ed Garcia on August 31, 2001 at 10:06:23:


The seasoning issue is not a matter of an illegal flip. It’s a matter of fact that the lender doesn’t consider the equity to be yours because you haven’t owned the property long enough to earn the equity.

Lenders feel that for a buyer to buy a property and then capitalize on equity that truly isn’t theirs is not the lenders intention. When the lender makes a loan and takes your equity position into consideration, they want that equity to be one of the reasons the borrower will pay. If the borrower just accumulated the property and has not earned the equity, the borrower will not feel a loss.

A years worth of seasoning and the buyer making monthly payments on the property. Demonstrates to the lender, that the buyer is involved and committed to maintaining the property.

There can be exceptions to this rule, depending on the property, borrower, and lender. As investors, once we know about this policy, and it is a policy not a law, we can buy and sell taking the time frame into consideration.

Ed Garcia

Seasoning Question - Posted by Hugo

Posted by Hugo on August 30, 2001 at 20:28:30:

Can anyone enlighten me as to the seasoning requirements that seem to be pickign up momentum. I was told by a lender that if I purchase a property I must hold on to it for a year before I can sell it otherwise it would be considered an illegal flip. What’s illegal about purchasing a property and selling for a profit. Imagine wanting to make a profit in a capitalist country. Where does this leave investors? Seems to me that the lenders that abide by this rule have shot themselves in the foot. I thought they were in the business of making loans. How can anyone have such a requirement? Does anyone know of any lenders that do not have such requirements?