Home : The FHA 90 Day Seasoning Rule

The FHA 90 Day Seasoning Rule

Posted by Tina Merritt on 10/30/2009 at 9:50 AM
Posted in Real Estate Investing

Blog Image For many investors who rely on FHA-approved buyers to purchase their homes, the "Seasoning Rule" can be a big issue.

What is the seasoning rule? In a nutshell, with very few exceptions, FHA will not fund a mortgage for a property that has been owned for less than 90 days. This causes many investors to lose money due to holding costs, extended time on the market and/or not being able to market to FHA buyers. This rule pertains to any title transfer so if an investor transfers a property from one LLC to another, the 90 day rule goes into effect.

On September 1, 2009, the rule was somewhat relaxed. FHA now allows for a waiver when the property is owned by a bank or some other foreclosing entity. It also allows for a relaxation of the rule when a home is sold by a state or federal agency.

Under the Neighborhood Stabilization Program (NSP), overseen by HUD, grant funds have been established for areas of the country with high foreclosure rates for the purpose of acquisition and rehabilitation of foreclosed and abandoned properties.

HUD has acknowledged that some state and local government agencies lack capacity to handle the number of properties NSP funds are intended for. Therefore, HUD is also allowing non-profit and for-profit companies to participate in the NSP grant program.

So, what does this mean for investors? If you invest in properties in "targeted areas", you may want to look into applying as an approved representative purchaser under the NSP. For those investors who are not in a targeted area, just keep waiting to see if the rule continues to be relaxed.

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Tina Merritt is an 11 year veteran Real Estate Agent and Trainer based out of Virginia Beach, Virginia. She holds a degree in economics from Virginia Tech and post-baccalaureate from Virginia Commonwealth in real estate and land development. As an avid social networker and internet marketer, Tina helps real estate agents, loan officers and affiliated industries embrace technology. As a real estate agent, Tina primarily deals with marketing and selling properties deemed "hard to sell" and also works with real estate investors helping them build and/or liquidate their portfolios for maximum profit.

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2 Comments

Posted by Hone on 11/01/2009 5:38 AM

Hi Tina. I am not an American citizen. Could I invest in HUD houses and use advantage of applying as an rep purchaser under the NSP? Look forward to hearing from you. Thanks a lot. Hong from China.

Posted by member1926510 on 11/04/2009 2:09 AM

would leasing the property for 90 days to a potential fha buyer help investors around the 90 day rule without holding cost affecting cost?

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