Mortgage Lender Adopts Anti-Flipping Policy
Inman News reports that the big banks are closing the door on speculators. "US Bank Home Mortgage this week implemented an 'anti-flipping'policy for conventional home purchases, saying it will no longer fund loans for properties in which the seller has held title for the property for less than 90 days's. Property flipping has become 'a threat to the integrity of the residential real estate industry.'"
Mortgage banker Alex Stenback notes, "It won't eliminate flipping or fraud. If all the top institutional lenders implement similar 90-day seasoning policies, he said, 'You have the subprime market out there waiting in the wings who would be more than happy to finance flipped properties.' People will still be flipping properties, and inexperienced buyers could end up holding high-cost loans on overvalued properties."
For some reason the writer ties the new measures to combating mortgage fraud, but that isn't the meat of the problem; it's speculation.
10 Comments:
I don't get it. It would have been more logical to penalize the seller by charging a prepayment penalty of a couple percents if selling in less than 90 days. Similar to what some mutual fund charge you if you do round trip transactions.
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I don't know if 90 days will make a difference to anyone. But it's a start. Guess it's better than 90 minutes.
Yea, 90days is a joke
The should but fee for flipping ... like 50%
It looks to me like Banks are trying a little CYA measure to stave off lawsuits. Maybe they smell Spitzer on their tails?
JLP
AllThingsFinancial
PS - HSH has a pretty good article on interest-only mortgages. Just follow this link.
Goleta --
Interesting increases. Does your site allow you do look at past numbers? I'd be interested to know if BK filing ordinarily increase towards the end of the week. My experience is that this is the case with a lot of legal filings, as firms spend all week putting the finishing touches on a project.
(So he said while finishing off three projects he'd procrastinated all week doing.)
A simple requirement of 20% (even 10%) down payment would go a long way.
Also, no matter what loan product one ultimately chooses, he should first be qualified for 30-yr amortization.
Creative financing is a cashflow management tool. It should not be a affordability tool.
In California, the number of actual foreclosures is very low compared to the number of preforeclosures. I am not sure whether this is related to the unwillingness of banks to pursue foreclosures at this point.
When the bubble burst, I wonder what will the banks do?
They cannot count on much preforeclosure interests without deep discounts.
They cannot all rush to foreclosure as that would further depress collateral value.
They do not want to hold the properties indefinitely.
They can and probably will need bail from the taxpayer.
Here in Florida, a condo into which I wanted to buy had pretty skewed prices, for being just a year old. I analyzed the tax records on every unit and found that nearly half of the units had been re-sold almost immediately after purchase. Most were flipped within 30 days and the rest within 60 days. Several of the owners who bought from flippers are trying, not too successfully, to re-flip at the same level of profit.
John -- I really hope so! It's about the only way I'll be able to afford what I wish for.
Can someone explain to me if this flipping of foreclosed property is illegal in NJ ? I see several people at auctions buying properties to see a few weeks later that these same properties are going up for sale.
A broker has stated to me that her companies are tightening up on it's practices....and how a lot of criminally minded people are using flipping as a means to launder money. she added that it has been illegal in NJ, but somehow allowed...but not for long.
Any help with allowing me to understand this is appreciated...Thanks !
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