As we know HUD does not finance buyers who buy properties that have not been owned by the owner at least 90 days.

I am wondering where is the logic? The goal is to clean the inventory of the market, that means somebody needs to buy this inventory. Lenders does not finance distressed houses with structural problems in foundation, roof etc. Actually there is a way, but this is a nightmare transaction so most of the regular buyers would not go trough it. The only people then, who could buy these properties are investors, but becaose lender do not finance, as I said distressed properties, investors use private money on high interest rate. They buy, rehab and then try to sell to the regular buyers, nice, updated property. Some buyer like the house but here the surprise is coming, they can't buy it, because this property has not been hold by the investor for more than 90 days. HUD even does not want to process the loan before the 90 limit and even the contract needs to be dated with a date after the 90 days. Such a mess ha?

Now we have buyer who can't buy, even is qualified and like the house. We have one more property staying on the market. We have an investor stacked with money in this property, instead to sell and buy another one.

So I am wondering what is the goal of this regulation: To restrict investors to make money? To restrict buyers to buy the house they like? To help the inventory stays on the market? Or may be stabilize the market?

I am just in this situation with one of my listings, such a nonsense. We had an offer on the second day and we have to close February, the problem comes that we can't have binding contract, because HUD wants the contract to have a date after 90th day....Some thoughts?

I know HUD makes exceptions for bank foreclosed property as to why title has not been held long.

For regular properties FHA got stuck with alot of fraud so they take their time now with the 90 day anti-flipping rule.

It doesn't make sense but that is big government at work(no logic).

Most FHA is taking 45 days to close anyways.

Victor,

I agree it makes no sense, and have had to deal with those crazy rules a couple of times in the past year. It seems like if they want to help the economy rid itself of unsold inventory, that requirement would go away yesterday! But those bad old investors might make a buck! Isn't that a good thing? Don't try to make sense of the rules (you never will), just play the game until common sense comes back (I'm a optimist, but that happening would really be a miracle)!

I have run into this a few times myself. They are trying to protect themselves from fraudulent flipping, but it does not really help. You can generally get around it by showing receipts for the work done to the house, provided you are not making too large a profit. Obviously someone with fraudulent intent could easily fabricate receipts, so the policy just creates useless paperwork and closing problems without combating fraud in any real way.

Just my opinion...

Matthew Donowho
Sterling Income LLC

[url=http://www.SterlingIncome.com]Sterling Income[/url]

Matt,

Do you think if I show receipts, HUD would approve the loan? My profit is not big. But this is stupid to control your profit. You can do it, you make money. What is going on around wow?

Regards,

Who decides that I'm making "too large a profit?" Government is the problem, not the solution.

No, it makes no sense at all. There is too much government regulation. Clear the market of regulation; let the market to its own devices and things will stabilize. Not going to happen, though, I am afraid. Not under this administration.

I hear the frustration Viktor. And I agree. It does seem a bit crazy sometimes. We are seeing much of the same taking place in our MN Real estate market....hang in there man!

Not under ANY administation. They are all power hungry and would never give up control....even on the LOCAL level.