Mrs c, Other/Just Looking in Longmeadow, MA

Please explain the 90 day rule regarding sellers

Asked by Mrs c, Longmeadow, MA Thu Aug 12, 2010

I am in the process of buying a home that is listed as being sold in January 2010 and again in may 20 2010... I read that a seller must own the house for 90 days prior to sale... Being that we are about 2 weeks shy of 90 days will that affect the sale? Does it matter what type of loan we are applying for?

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I not sure what I can add here - 90 days is a protection grid however almost half the lenders are doing 30 days now as the activity is extreme - I would contact variuos lenders and of course your attorney.

Jamin 978-335-9092
Century 21 Northshore
0 votes Thank Flag Link Thu Aug 12, 2010
Hi Mrs C,

Don't worry about that. The FHA had a 90 day seasoning hold. That hold was lifted April 1. Your seller can sell the house to you at this point. There is little seasoning anymore. MA Housing has a 30 day seasoning and I think Bank of America and Wells Fargo both have 30 day seasoning, but the 90 day seasoning was a FHA requirement that was lifted April first…

You'll be fine as a buyer or a seller if you purchase property and resell if it was FHA backed. Most lenders have lifted seasoning requirements.

Good luck!
0 votes Thank Flag Link Thu Aug 12, 2010
Funny you should ask, I just got off the phone with an investor Client. This Client will purchase homes at auction or short sale and resell them often making remedy to defects in the property. We just discussed the 90 day rule and actually it is 91 days and it reflects when a house can be resold to an FHA Buyer (although all lenders may initiate their own underwriting guidelines). But what one has to remember is not that the count down begins when the Seller buys the property but from the time that the Buyer makes full loan application, signs a purchase and sales agreement and conducts an appraisal of the property, whatever comes last starts the clock ticking. We ran into this recently with a different sale and thought we were all set because the closing date on the purchase and sales agreement was 91 days from the date the investor had purchased and then we were delayed by having it be 91 days from the appraisal date closing approximately six weeks late. I would suggest Mrs. C that you do have representation in any sale - a good Realtor and a good attorney are wonderful allies in such an important transaction as well as a mortgage broker who along with their underwriter are familiar with the standards to be met today. Good luck with your purchase and if I may ever be of assistance please do not hesitate to call on me.
0 votes Thank Flag Link Thu Aug 12, 2010

The 90 Day rule - also known as "Seasoning" - is basically fraud protection for the sellers of properties. It's to make sure that any sales information about the properties history is available, and to make sure that the first buyer paid a fair price, and not some sort of arranged below market deal. To protect banks, most lenders require that 90 days have passed on the sale, or they won't fund the loan, as the second lender doesn't want to get tangled up in whatever problems MAY (emphasis on MAY) have occurred previously.

0 votes Thank Flag Link Thu Aug 12, 2010
Not sure why you are not asking your own lender this question or a real estate attorney. They are the ones who can address your concerns.
0 votes Thank Flag Link Thu Aug 12, 2010
If you don't have a real estate attorney yet you need to get one. Also remember if you are buying a home listed by a broker you should have your own representation. Your REALTOR should be able to answer these questions. The answer below is correct is does effect it.
0 votes Thank Flag Link Thu Aug 12, 2010
Yes the 90 rule does matter and it will effect the loan you are applying for in most cases.
0 votes Thank Flag Link Thu Aug 12, 2010
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