Title Seasoning Issue------HELP!!!! - Posted by Jimmy

Posted by JPiper on August 27, 2001 at 12:18:45:

My favorite exit is lease/option. Good cashflow, and gives you time to season.


Title Seasoning Issue------HELP!!! - Posted by Jimmy

Posted by Jimmy on August 26, 2001 at 08:53:17:

My partner and I just bought a property for $82,500 that has an appraisal of $102,500. We have contracted to sell it to the occupant for 102,500 with 10% down…

Does any one have a lender that will finance this property for our buyer since we have only been on title for less than a week and have done no repairs?

Replies to simmmu@aol.com

Re: Title Seasoning Issue------HELP!!! - Posted by Dave Holls

Posted by Dave Holls on August 27, 2001 at 02:47:18:

If I understand what you’re asking, then it isn’t the lender that will have the problem with your short title history. The closing title company does the title search, not the mortgage company. The mortgage company bases their approval on the Buyer’s ability to pay back the loan and the appraisal of the property being more than the mortgage being issued. It has nothing to do with how long you (the owner) have owned the property.

Now, as far as not having done any repairs - that could be a problem, if repairs ARE needed. This will come into play if the buyer is getting an FHA or VA mortgage. FHA and VA require their own inspection be done on the property, and all repairs MUST be done before closing. And of course if your local city requires an inspection prior to a sale, those items will need to be addressed as well.

As far as your short term on title - this should not be the biggest problem. The problem will come up when the closing title company does their title search and only comes up with the previous owners recorded documents. (In many counties it can take up to 6 months to get documents recorded) You can make this a lot easier by informing the title company in the very beginning what the situation is, and giving them copies of your documents. After that everything should go fine.

I hope I understood your question correctly. If your doing any creative financing with THIS deal, then some of my advise may be different, but if you are just selling this property normally, than this should be correct. Also, as far as getting the new mortgage for buyer - if they have at least decent credit, you shouldn’t have much trouble getting a mortgage with 10% down from your normal local lenders. If they have real bad credit you may need to look to sub-lenders, but even then with 10% down it shouldn’t be a big problem. It just won’t be the most favorable terms for the buyer.

Hope this help.

FHA Loan (nt) - Posted by JT - IN

Posted by JT - IN on August 26, 2001 at 21:51:59:


Re: Title Seasoning Issue------HELP!!! - Posted by Jim FL

Posted by Jim FL on August 26, 2001 at 15:22:40:

You may want to ask this on the financing forum.
There are more people there with knowledge on this topic.
Also, make some calls to local mortgage brokers who advertise that they work with “Bad credit”.
Look in your yellow pages, I’m sure there are quite a few.
Call them and ask them this same question, and then get your buyer to them.
I met one here the other day that said he can get buyers with a 501 score an 80% mortgage, no problem.
We shall see, but it could work for me.
I often run accrossed buyers who have low scores, a decent down payment, but cannot get a loan.
With his 80% program, I can place them in with 10% down, 10% seller carried second, and a new 80% first.

And all I did was talk to the guy over lunch after he called me.
When you find a broker who can get your buyers loans, keep them around, and develope a relationship.
They are an important part of your REI team, in my opinion.

Jim FL

hRe: Title Seasoning Issue------HELP!!! - Posted by JPiper

Posted by JPiper on August 27, 2001 at 07:54:50:


In today’s market many lenders will not loan to a borrower buying from a SELLER who has been on title for under one year. This is called title seasoning.


Re: hRe: Title Seasoning Issue------HELP!!! - Posted by Dave Holls

Posted by Dave Holls on August 27, 2001 at 19:09:05:

Could you please explain the reasoning the lender has. I do not understand why it would be a requirement for the seller to have been on title for over a year for the borrower to qualify. This has nothing to do with the actual loan. What if the owner paid cash and owns the property free and clear, or does have a mortgage, and wants to turn around and sell it - what business is it of the lender if the owner doesn’t want the property anymore? I don’t see how this is part of a qualification to borrow, and I have never even heard a loan rep ask anything like that. Besides, unless they were told ahead of time, a lender wouldn’t know how long a seller has been on title until after the search has come back, and by that time the buyer should be approved.

Re: hRe: Title Seasoning Issue------HELP!!! - Posted by HOuserookie

Posted by HOuserookie on August 27, 2001 at 11:49:13:

Hi Jim,

Isn’t it possible to sell an option to a
new buyer? If immediate cash is not needed, one could hold it for the amount of the option and secure it against the property?

It’s good cashflow if you can do a few of these.

What’s your opinion on this?


Austin (MN)

Re: hRe: Title Seasoning Issue------HELP!!! - Posted by JohnBoy

Posted by JohnBoy on August 27, 2001 at 19:55:59:

The buyer may be approved, but as soon as title comes back and they see the seller hasn’t been on title for 12 months or longer, they will pull the loan.

This has been a result of all the flipping scams going around the country. It really has nothing to do with “flipping” itself, it’s the loan fraud going on as a result of it. To many sellers, loan brokers and appraisers using inflated property values, repairs not being done that were supposed to, lying on loan apps, etc.

Lenders have been making loans on these properties which were quick turn real estate deals where buyers have way over paid and later defaulted on the loans. The lenders are getting stuck with properties that were “supposed” to be worth $100k, and later they find out they are only worth, maybe $60k, resulting in the lenders losing over 40% of what they loaned within a year of making them.

Rather than the lenders getting smart enough to crack down on the real problem, which is all the loan fraud going on, they just painted a broad brush on everything and made it a policy to not fund loans on property where the seller has owned for less than a year.

I can’t imagine why you haven’t heard anything about this. This has been a problem in major cities across the country.