Financing in Detroit>Question Details

Donald Olend…,  in Shelby Township, MI

My construction company bought a house on land contract and fixed it up spending $60,000 on repairs and upgrading. A FHA underwriter won't give

Asked by Donald Olendorf, Shelby Township, MI Tue Sep 29, 2009

my buyer a loan because they say I don't hold title. I suppose that technically they are correct because the title won't pass to me until the land contract is payed off. It's hard to imagine that there isn't a way to overcome this problem. Do the rules really mean to exlude giving mortages to buyers when the seller's ownership is evidenced by a land contract (or in some states a "trust deed")? How do I get around this?

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hi..please give me a call so i can get a bit more info on your deal..we can probably work thru your issue..thanks...
bob mcclure
first preferred mortgage
southfield, michigan...
0 votes Thank Flag Link Wed Apr 14, 2010
good afternoon...the 90 day seasoning previously required for fha flips has now been set aside.....but only just recently...i can only assume the land contract was recorded...i will check with our underwriter tomorrow and see if it the same issue applies with us as it does where your deal is placed...more regards.....bob mcclure- first preferred- southfield, michigan...
0 votes Thank Flag Link Tue Apr 13, 2010

I am a mortgage broker/lender in Grand Rapids and have emailed several underwriters at different lenders about this (including my in house underwriting department). In order to sell this house you will need to be vested owner on title for 91 days. I would suggest that you let me take a look at refinancing the land contract for you. Once we close we can begin the loan process for your buyer and we can close his loan on the 91st day after you take title. If you will not qualify for a conventional refinance we could also look at doing a hard money loan for you that would allow you to take title. Not what you wanted to hear, but that is the quickest means to an end from what I see. Your buyer will also be required to have 2 appraisals done and we will use the lesser of the two values as the max sales price. Give me a call and we can discuss it further if you like!

TJ Malkasian
Mortgage Banker

Top Flite Financial, Inc.
4149 Embassy Dr.
Grand Rapids, MI 49546

P: (877) FHA-QUOTE
P: (616) 433.7066
F: (616) 829.6002
0 votes Thank Flag Link Tue Apr 13, 2010
FHA is very strict on certain aspects of house flipping and buyer awareness. If it was me, I would start off with the verbage of the land contract as stated by Andy. Was this a recorded land contract? Is there a mortgage on the home now? This may be fixable depending on how the initial land contract transaction was done. I would like to look at the information to see if there is a way to fix the problem, there usually is!
0 votes Thank Flag Link Tue Sep 29, 2009
Read the verbiage in your contract about should you want to sell your land contract.
The deed was likely originally escrowed as part of your land contract, so you may want to call your attorney as well to find out the easiest way to facilitate transfer. Your original contract still holds weight.
0 votes Thank Flag Link Tue Sep 29, 2009
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