Commitment letter "Title Condition" (loan officer, premium, loan, bank)

[Jersey25]

Hi,

Has anyone here ever heard to a Commitment Letter Condition stating the following:

Preliminary Title Report - Provide title report with 24 month chain; seller must be on title a
minimum of 12 months.

I understand about the 90 day flip rule and etc, but why would the FHA have a flip rule of 91-180 days (which was satisfied) yet an underwriter wants a "seller to be on a title a minimum of 12 months", Is that something that is required by law? The home was sold, renovated, and now is up for sale and it's impossible in this scenario for the seller to be on the title 12 months.

Can someone please chime in regarding this scenario?

[AZJoeD]

Many lenders have their own "overlays" beyond the FHA requirments. Many extend the "flip rule" beyond the FHA 90 days. Some lenders will lend on flip homes, but may require 2 appraisals to validate value. Others will only lend on resales that have not increased in value by more than 10%, etc. There can be any number of rules that lenders use.

Discuss this requirement with your loan officer, they may waive it if can show the homes' value. If your current lender will not lend on this home or if they are placing a premium on this loan, contact a new lender. I know you probably feel you are too far down the road with this lender, but somtimes you have no choice.

[Jersey25]

Originally Posted by AZJoeD

Many lenders have their own "overlays" beyond the FHA requirments. Many extend the "flip rule" beyond the FHA 90 days. Some lenders will lend on flip homes, but may require 2 appraisals to validate value. Others will only lend on resales that have not increased in value by more than 10%, etc. There can be any number of rules that lenders use.

Discuss this requirement with your loan officer, they may waive it if can show the homes' value. If your current lender will not lend on this home or if they are placing a premium on this loan, contact a new lender. I know you probably feel you are too far down the road with this lender, but somtimes you have no choice.

I understand, a second appraisal has already been ordered and completed, just waiting on the report. It just does not make logical sense to me to have a commitment clause saying:

" FHA 91-180 day rule second appraisal required etc..."

and than also

"Provide title report with 24 month chain; seller must be on title a
minimum of 12 months."

If the lender knows that this house was flipped than why would they order a second appraisal (and pay for it themselves) knowing that seller has not been on the title for at least 12 months?

This is the scenario:

Foreclosure----> Bank----> Investor----> Buyer

Maybe they want to see that this didn't happen:

Foreclosure----> Bank ----> Wholesaler ----> Investor ---->Buyer

It's well after the 90 day period.

[Pfhtex]

Did the lender offer an explanation as to why?