Juicy Estates: Mortgage Blog

90 Day Seasoning Rule, a Ghost In the Machine

By now most real estate professionals are familiar with the FHA requirement that a seller of a property be on title for 90 days before they can sell to a new buyer.  What many are not aware of is that by the end of this past August most lenders adopted this same rule for conventional financing as well.   One of the most compelling aspects of being a real estate professional is that you learn something new every day and my recent experience with the 90 day seasoning rule was a great example.

I have the privilege with working with many successful and talented Realtors and recently had the opportunity to provide financing for a family member of one of South Florida’s best.  In an effort to be proactive regarding the 90 day seasoning rule for conventional financing I emailed a copy of the Miami Dade County tax roll for the subject property to the underwriter on the file.  The closing date for the current owner was reflected as on the tax roll 5/28/09 and as confirmed by the underwriter in writing we should be fine to close any time after 8/28/09.  What I and no one else in the transaction were aware of was that the investor/owner had originally closed on the property on 5/28/09 but had subsequently transferred ownership to another company that he owned.  The result of this transfer that did not show on the tax roll is that the continuity of title date from an underwriting perspective was the transfer date and not the original sale date pushing the earliest possible closing date back a full 30 days to 9/28/09.

The transparent transfer was only revealed by the title search and not being aware of the 90 day seasoning requirement the title agent did not think it would be an issue as it never had been in the past.  When we were informed that this would be an issue for underwriting we made every effort to obtain an exception on the 90 day rule even going as far as asking the attorney in the transaction to write an opinion on the subject but to no avail. 

In the end my incredibly supportive employer agreed to portfolio the loan at the same low 30 year fixed rate as originally promised to the client and close right away as opposed to waiting for the conventional financing to be available at the end of the month.

The lesson in this scenario is that when it comes to the 90 day seasoning rule for FHA and Conventional financing you CAN NOT rely on the tax roll to determine when the clock starts ticking.  In my opinion if you notice the sale or transfer of a property you or your client has under contract at any point in the last 12 months you should investigate further and call your title agent immediately.

This entry was posted on Friday, September 4th, 2009 at 9:35 am and is filed under Home, Mortgage News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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