FHA Chain of Title Rules and property flips
Chain-of-Title: A chain-of-title is required covering the preceding 12-month period. The property seller must have been the "owner-ofrecord"
for at least the preceding 90 days in order to be eligible for FHA-financing. Properties that have transferred ownership within
the preceding 91-180 day period may require a second appraisal report. If the current re-sale price of the property exceeds the previous
sales price by more than 100%, a second appraisal report is required to support the current transaction value and may require additional
documentation such as improvements to the property, etc. The cost of the additional appraisal report cannot be borne by the borrower.
The following categories of properties are exempted from the 90-day restriction of re-sale:
· Resales by:
· Federal Government agencies,
· State and Federally chartered financial Institutions and government-sponsored enterprises (i.e. Fannie Mae/Freddie Mac),
· Local and State government agencies,
· Temporary Waiver (expires 6/9/09) - property acquired through foreclosure by mortgagees or by their subsidiaries or vendors to
whom they have transferred title to the property for the purpose of effectuating the sale of those properties.
· Nonprofits approved to purchase HUD REO properties at a discount: http://www.hud.gov/offices/hsg/sfh/np/np_hoc.cfm
· Sales of properties within Presidentially-Declared Disaster Areas (upon FHA's announcement of eligibility in a mortgagee letter
specific to said disaster)
· New construction involving the builder,
· Properties purchased by employer or relocation agency in connection with the relocation of an employee and
· Properties acquired by inheritance are excluded
What does all this mean? Ask questions prior to making an offer on any property !