Earlier this week, I pointed out that FHA had waived their 90-day title seasoning requirements for new FHA loans on properties that had been foreclosed.
Many people took this to mean that it’s open season on flipping properties. Unfortunately, that’s not true, and I have to admit culpability for being less than perfectly clear.
This waiver applies only to properties that have already been foreclosed. So it does not apply to properties facing foreclosure, or to properties you’d like to short sale. It applies only to properties that have already completed the foreclosure process.
Additionally, there is some debate about whether the waiver applies to real estate investors at all, since the text appears to aim the waiver at “subsidiaries and vendors” of mortgage lenders. I think that this does not preclude application of the waiver to real estate investors, since it’s perfectly reasonable to classify a real estate investor as a “vendor” (since the word “vendor” simply means “seller”). But to be fair, the jury is still out on this one.
If you’re an FHA lender with first-hand knowledge of this issue, I’d love to hear from you.
Based on some recent clarifications of this issue, it appears that this issue may not effect real estate investors at all, with one exception: If you are able to establish yourself or your company as a “vendor” for a lender that is attempting to dispose of foreclosed property, then the waiver would apply to you. Otherwise, it’s business as usual.