My lender has declined my loan on a particular property because the seller hasn't owned the property for 90 days? Anyone ever heard of this?

Asked by Emtman2001, Kettering, OH Tue May 29, 2012


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Mark Ryan-Mark Ryan Group’s answer
Mark Ryan-Ma…, Agent, Centerville, OH
Tue May 29, 2012

The other agent had many points right if this is an FHA loan... the one I would disagree with was them not being up to date. HUD did change the rules but MANY lenders kept what they call an "overlay" or a rule they make for themselves to help protect them...

So, yes it could very well be a underwriting issue based only on the length of time the seller has owned it... if that is the case they generally will not allow you to even be under contract until day 91...

Let me know if you want a referral to a great loan officer that is able to handle the loan without the 90 day rule... as a team we work with a LOT of buyers so we have found someone that we have partnered with that is able to better serve all our buyers and being able to do an FHA loan under 90 days is a huge issue for us.. Would love to help if you need it.

Hope this explanation helps some.

Good luck!
1 vote
Darrell D. D…, Agent, Schertz, TX
Tue May 29, 2012
I assume you're using an FHA loan..There was a regulation that limited the guaranty on these loans to buyers if the seller owned the home less than 90 days. It was generically called the "FHA anti-flipping rule." Since FHA backs these loans, the lenders have to follow their rules.

That being said, if this is the case, then your lender has not kept up with the guidelines. They may have other reasons for the denial, but if it's merely to comply with the 90 day possession guideline of the FHA, then you need to question further. In order to stabilize the housing market, the FHA temporarily waived this requirement back in 2010. The exemption from following the guidelines was set to expire in December 2011 which would have meant that the 90 day rule was re-instated.

But, the government extended the exemption again until December 2012 which means that the 90 day rule does not have to be followed. I would question your Lender or ask another Lender. Here is the link for the government extension of the exemption...

Good Luck!
0 votes
Christina Ha…, Mortgage Broker Or Lender, Morristown, TN
Mon Apr 29, 2013
As the others mentioned you will need to question if your loan was declined solely due to the 90 day issue.

Best of Luck;

Christina Solorzano;
CEO & SR Credit Repair Specialist at
Everlasting Credit Repair
Ex-Mortgage Broker of more than 10 years
0 votes
Rudy McDowell, Mortgage Broker Or Lender, Bloomfield Hills, MI
Wed May 30, 2012
You can now ( and for some time) do FHA loan for properties with less than 91 days seasoning. They just require a 2nd appraisal, and the lower of the 2 will be used. Conventional financing doesn't have this restriction or requirement. If your current lender doesn't know or allow this, find another.
0 votes
My NC Homes…, Agent, Chapel Hill, NC
Wed May 30, 2012
This is a realitvely new rule and from what the lenders I work with reguarly have told me it only applies when the borrow requires PMI. If you're putting down 20% or more this isn't an issue.
0 votes
Annette Levi…, , New York, NY
Wed May 30, 2012
Its time to go to another lender. Their 90 day rule (as mentioned) is an overlay on regulations.
Most banks do not have this overlay-mine doesn't, so it is time to go shopping for a lender.
0 votes
Mlauther1, , Dayton, OH
Wed May 30, 2012
Lenders are concerned that investors are "flipping " properties at inflated values and have put restrictions or what is known as seasoning. If your current owner purchased this property at a deep discount market it up and is selling it to you it may or may not be a good buy. The lender is protecting their interest with this requirement. Not all lenders require 90 day seasoning so it may be in your best interest for you to shop around.
0 votes
Abu Musa, Agent, New York, NY
Wed May 30, 2012
You already get some answers. You may talk to mortgage banker for more details.
0 votes
Steve Ewing, Agent, Dayton, OH
Wed May 30, 2012
Yes...Guidelines to prevent certain types of " Flips"
0 votes
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