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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Wells Fargo Property Flipping Policy Changes Posted by CC in OC on December 21, 2009 at 11:20 PM Due to current market conditions manifesting a large volume of distressed properties, the existing policy of not allowing financing for flipped properties has been revised. Legitimate property flipping transactions are now eligible to be financed by Wells Fargo Home Mortgage (primary residence and second homes only). Effective immediately, all conventional loans not yet funded that meet the definition of a flip must: (1) follow the policy guidelines below; and (2) be reviewed and approved by NDS/NCO (if exception not already obtained). Additional appraisal products are required that will result in additional time and cost to the transaction. If a full second appraisal is required, NDS/NCO must authorize and will order through the Appraisal Compliance Department. See processes below to prevent any delays in the ordering process. -- Purchase transactions only. -- Primary and second homes only. -- Full documentation. -- If the loan is denied due to flip transaction requirements, the file cannot be brokered out. -- If the seller is on title less than 90 days prior to the purchase contract date of the subject property, LTV cannot exceed 80%. Executing a new sales contract to avoid this requirement is not allowed. If the seller is on title for more than 90 days but less than 12 months prior to purchase contract date of the subject property, follow standard published program LTV requirements. Executing a new sales contract to exceed the 12 months is not allowed. -- Down payment and cash needed to close must be fully documented. -- No gift of equity allowed. -- No funds from the seller (including down payment assistance programs) will be allowed other than standard seller contributions. -- Second mortgage financing allowed. Form 4506-T must be processed as part of the origination of the loan. If the increase between the seller's purchase price and the sales price on the subject transaction is greater than 15%, two full appraisals will be required. If the value of one of the appraisals is lower, the lower of the two values must be used. A reconciliation of the appraisals may be allowed by following the standard escalation process as long as the loan is not High Balance ($417000-$729750). If the increase between the seller's purchase price and the sales price on the subject transaction is less than 15%, a CCR or an exterior appraisal must be ordered to validate the original appraised value. The appraiser must: -- provide the listing and sales history of the subject property; -- comment on improvements to the subject property, supported with photos; -- acknowledge the large increase in sales price from the previous sale and provide commentary on support for a large increase in value. A LoanSafe report must be reviewed alongside the appraisal(s) with specific attention to the available sales, property history, buyers/sellers of nearby properties, etc. Property must be exposed to the open market through MLS, traditional (non- Internet) auction, developer marketing, etc. Buyer and seller may not be represented by the same real estate agent or broker. Sales contract must be reviewed. Any reference to "assignment of a contract of sale" is ineligible. Seller must be on title to the subject property. No more than one title transfer, as documented by a 12 month chain of title and title commitment other than financial institutions or government entities, in the last 12 months. Be aware that asset management companies that lenders hire to handle foreclosure and short sales (such as Premiere Asset Services) would not count as a title change. A 12 month chain of title must be obtained on the subject property. Ownership of an LLC, corporation or trust must be fully documented. Transactions must be arms length. Follow Ups: Re: Wells Fargo Property Flipping Policy Changes jbirdfunk 10:05 AM, 12/23/09 (0) Re: Wells Fargo Property Flipping Policy Changes Geri 9:46 AM, 12/22/09 (3) Re: Wells Fargo Property Flipping Policy Changes BrianH 5:05 AM, 12/23/09 (1) Re: Wells Fargo Property Flipping Policy Changes CC in OC 4:03 PM, 12/23/09 (0) Before I finish reading ... Skimmer 9:22 PM, 12/22/09 (0) Post a Followup: Name : E-Mail : Subject : Comments: : Due to current market conditions manifesting a large volume of distressed : properties, the existing policy of not allowing financing for flipped properties has : been revised. Legitimate property flipping transactions are now eligible to be : financed by Wells Fargo Home Mortgage (primary residence and second homes : only). : Effective immediately, all conventional loans not yet funded that meet the definition : of a flip must: (1) follow the policy guidelines below; and (2) be reviewed and : approved by NDS/NCO (if exception not already obtained). : Additional appraisal products are required that will result in additional time and : cost to the transaction. If a full second appraisal is required, NDS/NCO must : authorize and will order through the Appraisal Compliance Department. See : processes below to prevent any delays in the ordering process. : -- Purchase transactions only. : -- Primary and second homes only. : -- Full documentation. : -- If the loan is denied due to flip transaction requirements, the file cannot be : brokered out. : -- If the seller is on title less than 90 days prior to the purchase contract date of the : subject property, LTV cannot exceed 80%. Executing a new sales contract to avoid : this requirement is not allowed. : If the seller is on title for more than 90 days but less than 12 months prior to : purchase contract date of the subject property, follow standard published program : LTV requirements. Executing a new sales contract to exceed the 12 months is not : allowed. : -- Down payment and cash needed to close must be fully documented. : -- No gift of equity allowed. : -- No funds from the seller (including down payment assistance programs) will be : allowed other than standard seller contributions. : -- Second mortgage financing allowed. : Form 4506-T must be processed as part of the origination of the loan. : If the increase between the seller's purchase price and the sales price on the subject : transaction is greater than 15%, two full appraisals will be required. If the value of : one of the appraisals is lower, the lower of the two values must be used. A : reconciliation of the appraisals may be allowed by following the standard escalation : process as long as the loan is not High Balance ($417000-$729750). : If the increase between the seller's purchase price and the sales price on the subject : transaction is less than 15%, a CCR or an exterior appraisal must be ordered to : validate the original appraised value. : The appraiser must: : -- provide the listing and sales history of the subject property; : -- comment on improvements to the subject property, supported with photos; : -- acknowledge the large increase in sales price from the previous sale and provide : commentary on support for a large increase in value. : A LoanSafe report must be reviewed alongside the appraisal(s) with specific : attention to the available sales, property history, buyers/sellers of nearby : properties, etc. : Property must be exposed to the open market through MLS, traditional (non- : Internet) auction, developer marketing, etc. : Buyer and seller may not be represented by the same real estate agent or broker. : Sales contract must be reviewed. Any reference to "assignment of a contract of sale" : is ineligible. : Seller must be on title to the subject property. : No more than one title transfer, as documented by a 12 month chain of title and : title commitment other than financial institutions or government entities, in the last : 12 months. Be aware that asset management companies that lenders hire to handle : foreclosure and short sales (such as Premiere Asset Services) would not count as a : title change. : A 12 month chain of title must be obtained on the subject property. : Ownership of an LLC, corporation or trust must be fully documented. : Transactions must be arms length. [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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