Replies to This Discussion

Permalink Reply by Wanda Bond on December 29, 2011 at 4:08pm

Wells Fargo strictly enforces this policy. Their short sales affidavit says in part, "Buyer(s) further certify and affirm under penalty of perjury, that;(g) The property will not be sold within 90 days of the closing date of the subject real estate purchase contract."  

They stick to the letter of the law when it comes to FR-4615 -- the Anti-Flipping Rule; and if you're a Realtor on the flip side of an investor property NOT owned for "91" days, you've just bought your buyers a guaranteed 2nd appraisal (at their or your expense) and a re-inspection (at their or your expense) if home inspector finds any issues whatsoever. 

Permalink Reply by Tommy Flynn on December 29, 2011 at 5:05pm

My investor intends to sell the property with in 90 days. He thinks they will not have a problem unless he sold it to the original owners (arms-length).

Permalink Reply by Neil Blumberg on December 29, 2011 at 6:10pm

Here's the language of the affidavit that I have (not sure it's the latest version):

               Buyer(s) further certify and affirm under penalty of perjury, that;
               (g) the property will not be sold within 90 days of the closing date of the subject real estate
                purchase contract;

It seems to me there is nothing stopping the new owner/seller from lease optioning the property to a buyer after the renovations have been done, with the actual sales contract being signed (if at all) after the 90th day, provided he complies with all other provisions of the affidavit, including not having pre-sold the property prior to his purchase. And if he doesn't want to lease option he may do a straight option contract, with the actual sales contract signed on day 91.  

Because there is so much fraud floating about, you may want to run this by Wells Fargo to make sure you're complying with their requirements.  And I would recommend you get advice from an attorney if you had not obtained the express written permission from Wells Fargo.............No deal is worth your license.

Permalink Reply by Wanda Bond on December 29, 2011 at 9:00pm

Here's the law: Anti-Flip Waiver and it's good through the end of December, 2011.  This is what the lenders go by. FYI.

Permalink Reply by Neil Blumberg on December 29, 2011 at 9:58pm

I'm well aware of the anti flip waiver.  But if a buyer is required to sign section (g), in the affidavit I have, there is no exception made for investors. If Tommy could attach the affidavit, it would clear up this issue.

A comparable issue exists with payments to sellers in short sales. The Federal government recently compelled Kentucky to allow payment incentives to sellers by realtors.  So I'm allowed to pay my seller clients, if I want, up to 100% of my commission or even more. However the majority of short sale letters from banks forbid the seller from receiving any benefit.  So the banks limit the application of that law in the case of short sales.  I believe it is the same here: the banks don't have to follow the letter of the anti flip waiver, but can exclude its application, I believe, in the way section (g) does.

I'd be interested to hear from our colleagues on this issue.  Thanks for your follow up.

Permalink Reply by Neil Blumberg on December 29, 2011 at 10:19pm

Attached are 2 links: one with what I believe is the latest Wells Fargo Affidavit, and the second being commentary.

http://library.constantcontact.com/download/get/file/1104106719996-...

http://blog.berlinpatten.com/2011/06/01/wells-fargo-short-sale-adde...

Permalink Reply by Tommy Flynn on December 30, 2011 at 11:53am

The anti flip waiver only applies to FHA financing. He can sell the property as long as the new buyer isn't getting an FHA loan. The link above is the same affidavit I referenced. The investor is going strike thru line (g) and initial it. We'll see what happens. If they will not waive line (g) he is going to sell it anyway. He doesn't think they will pursue him as long as he doesn't sell or rent it to the original homeowners.

Permalink Reply by Neil Blumberg on December 30, 2011 at 12:33pm

You're correct about the financing (by the way the waiver was extended 2 days ago for another year). Deleting may work.  It's worth escalating it if you are initially refused. If not it may be worthwhile considering the option idea. But if your buyer signs that affidavit with (g), I think he's prohibited from selling for 90 days.  Interesting. Please let me know how it turns out.

I have a meeting concerning an Indiana property next week with a lender's attorney to see if there is some way to waive the arms length prohibition - parents want to purchase an under water property from daughter.

Permalink Reply by Tommy Flynn on December 30, 2011 at 12:53pm

He asked me to photoshop it out of the document before all parties sign. I'm a little scared to do that. I think a strike thru is a little more straight forward.

Permalink Reply by MRosania on December 30, 2011 at 3:38pm

I wouldnt do anything that "scared" me, as mentioned above no deal is worth your license. If I am not mistaken I believe there is a deed restriction which would prohibit transfer of the deed so no title company I know of would issue a title policy. If he is telling you flat out that he will not adhere to that provision and you cant something from Wells specifically waiving it I would walk away from the deal personally. Investors think they know everything when in fact most dont know anything. They got away with a few flips here and there and think that its OK when in fact its not and they can careless about your well being. Ask him if hes willing to split his profits with you since you are the one risking your license and see what he says to that!

Permalink Reply by Neil Blumberg on December 30, 2011 at 5:54pm

Hey Tommy, ask yourself this question: If a reporter found out about this deal, is there anything you've done you'd not want reported in tomorrow's paper and TV. If the answer is "yes", don't do it.  My mom said I just don't look good in orange.

Permalink Reply by Tommy Flynn on December 30, 2011 at 6:12pm

I hear ya. I'm simply going to ask for it to be waived. If not, I walk.

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