Kentucky FHA Property Flipping Guidelines

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FHA’s re-sale restriction period is defined as the time between the date of acquisition (original settlement date) and the date of execution of the new sales contract (the new loan closing date)
Re-sales of a property less than 90 days after acquisition are not eligible for an FHA insured mortgage
Re-sales occurring between 91 and 180 days of acquisition with a sale price 100% over the original purchase price must have the value supported by a 2nd appraisal
Re-Sales occurring between 91 days and 12 months of acquisition with a re-sale price 5% greater than the lowest sales price of the property during the 12 months preceding the sales contract may be subject to a 2nd appraisal
Exceptions to the time restrictions on sales:

Sales by HUD of Real Estate-Owned (REO) properties under 24 CFR part 291 and of single family assets in revitalization areas pursuant to section 204 of the National Housing Act (12 U.S.C. 1710);
Sales by another agency of the United States Government of REO single family properties pursuant to programs operated by these agencies;

Sales of properties by nonprofit organizations approved to purchase HUD REO single family properties at a discount with resale restrictions;
Sales of properties that were acquired by the sellers by inheritance;
Sales of properties purchased by an employer or relocation agency in connection with the relocation of an employee;
Sales of properties by state- and federally-chartered financial institutions and government-sponsored enterprises (GSEs);
Sales of properties by local and state government agencies; and
Only upon announcement by HUD through issuance of a notice, sales of properties located in areas designated by the President as federal disaster areas. The notice will specify how long the exception will be in effect.
Read More about Flipping Rules for FHA, VA , USDA and KY Housing Mortgage Loanss in Kentucky at the link below
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Joel Lobb (NMLS#57916)
Senior  Loan Officer
 
American Mortgage Solutions, Inc.
Company ID #1364 | MB73346
 


Text/call 502-905-3708
kentuckyloan@gmail.com

Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant  Equal Opportunity Lender. NMLS#57916http://www.nmlsconsumeraccess.org/

— Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification.

FHA Mortgage guidelines for a Kentucky property that has well water and septic.

 

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Below are Kentucky  FHA guidelines for a property that has well water and septic tanks for waste disposal .  The Kentucky FHA appraiser should be able to address the distance between the well and septic for distance requirements, and comment if public sewers are available.

Well water test will be required as a closing condition. FHA mortgages loans in Kentucky  require a septic inspection unless the appraiser mentions it is necessary.

(O) Water Supply Systems in Kentucky 

(1) Public Water Supply System The Mortgagee must confirm that a connection is made to a public or Community Water System whenever feasible and available at a reasonable cost. If connection costs to the public or community system are not reasonable, the existing onsite systems are acceptable, provided they are functioning properly and meet the requirements of the local health department.

(2) Individual Water Supply Systems (Wells) When an Individual Water Supply System is present, the Mortgagee must ensure that the water quality meets the requirements of the health authority with jurisdiction. If there are no local (or state) water quality standards, then water quality must meet the standards set by the EPA, as presented in the National Primary Drinking Water regulations in 40 CFR §§ 141 and 142. Soil poisoning is an unacceptable method for treating termites unless the Mortgagee obtains satisfactory assurance that the treatment will not endanger the quality of the water supply. Requirements for the location of wells for FHA-insured Properties are located in 24 CFR § 200.926d (f) (3). The following tables provide the minimum distance required between wells and sources of pollution for Existing Construction:

Individual Water Supply System for Minimum Property
Requirements for Existing Construction*
1 Property line/10 feet
2 Septic tank/50 feet
3 Drain field/100 feet
4 Septic tank drain field reduced to 75 feet if allowed by local authority
5 If the subject Property line is adjacent to residential Property then local well distance requirements prevail. If the subject Property is adjacent to non-residential Property or roadway, there needs to be a separation distance of at least 10 feet from the property line.
* distance requirements of local authority prevail if greater than stated above

The following provides the minimum requirements for water wells:

Water Wells Minimum Property Standards for New Construction
24 CFR § 200.926d(f)(1)
1 Lead-free piping
2 If no local chemical and bacteriological water standards, state standards apply
3 Connection of public water whenever feasible
4 Wells must deliver water flow of five gallons per minute over at least a four-hour period
Water Wells Minimum Property Requirements for Existing Construction
1 Existing wells must deliver water flow of three to five gallons per minute
2 No exposure to environmental contamination
3 Continuing supply of safe and potable water
4 Domestic hot water
5 Water quality must meet requirements of local jurisdiction or the EPA if no local standard

Shared WellsThe Mortgagee must confirm that a Shared Well:

  • serves existing Properties that cannot feasibly be connected to an acceptable public or Community Water supply System;
  • is capable of providing a continuous supply of water to involved Dwelling Units so that each existing Property simultaneously will be assured of at least three gallons per minute (five gallons per minute for Proposed Construction) over a continuous four-hour period. (The well itself may have a lesser yield if pressurized storage is provided in an amount that will make 720 gallons of water available to each connected existing dwelling during a continuous four-hour period or 1,200 gallons of water available to each proposed dwelling during a continuous four-hour period. The shared well system yield must be demonstrated by a certified pumping test or other means acceptable to all agreeing parties.);
  • provides safe and potable water. An inspection is required under the same circumstances as an individual well. This may be evidenced by a letter from the health authority having jurisdiction or, in the absence of local health department standards, by a certified water quality analysis demonstrating that the well water complies with the EPA’s National Interim Primary Drinking Water Regulations;
  • has a valve on each dwelling service line as it leaves the well so that water may be shut off to each served dwelling without interrupting service to the other Properties; and
  • serves no more than four living units or Properties.

For both proposed and existing Properties, the Mortgagee must ensure that the shared well agreement complies with the guidance provided in the following table.

Item Provisions that must be reflected in any acceptable shared well agreement include the following:
1 Require that the agreement is binding upon signatory parties and their successors in title, recorded in local deed records when executed and recorded, and reflects joiner by any Mortgagee holding a Mortgage on any Property connected to the Shared Well.
2 Permit well water sampling and testing by the local authority at the request of any party at any time.
3 Require that corrective measures be implemented if testing reveals a significant water quality deficiency, but only with the consent of a majority of all parties.
4 Ensure continuity of water service to “supplied” parties if the “supplying” party has no further need for the shared well system. (“Supplied” parties normally should assume all costs for their continuing water supply.)
5 Prohibit well water usage by any party for other than bona fide domestic purposes.
6 Prohibit connection of any additional living unit to the shared well system without:

¡        the consent of all parties;

¡        the appropriate amendment of the agreement; and

¡        compliance with item 3.

7 Prohibit any party from locating or relocating any element of an individual sewage disposal system within 75 feet (100 feet for Proposed Construction) of the Shared Well.
8 Establish Easements for all elements of the system, ensuring access and necessary working space for system operation, maintenance, improvement, inspection and testing.
9 Specify that no party may install landscaping or improvements that will impair use of the Easements.
10 Specify that any removal and replacement of preexisting site improvements, necessary for system operation, maintenance, replacement, improvement, inspection or testing, will be at the cost of their owner, except for costs to remove and replace common boundary fencing or walls, which must be shared equally between or among parties.
11 Establish the right of any party to act to correct an emergency in the absence of the other parties onsite. An emergency must be defined as failure of any shared portion of the system to deliver water upon demand.
12 Permit an agreement amendment to ensure equitable readjustment of shared costs when there may be significant changes in well pump energy rates or the occupancy or use of an involved Property.
13 Require the consent of a majority of all parties upon cost sharing, except in emergencies, before actions are taken for system maintenance, replacement or improvement.
14 Require that any necessary replacement or improvement of a system element(s) will at least restore original system performance.
15 Specify required cost sharing for:

¡        the energy supply for the well pump;

¡        system maintenance, including repairs, testing, inspection and disinfection;

¡        system component replacement due to wear, obsolescence, incrustation or corrosion; and

¡        system improvement to increase the service life of a material or component to restore well yield or to provide necessary system protection.

16 Specify that no party is responsible for unilaterally incurred shared well debts of another party, except for correction of emergency situations. Emergency correction costs must be equally shared.
17 Require that each party be responsible for:

¡        prompt repair of any detected leak in this water service line or plumbing system;

¡        repair costs to correct system damage caused by a resident or guest at their Property; and

¡        necessary repair or replacement of the service line connecting the system to the dwelling.

18 Require equal sharing of repair costs for system damage caused by persons other than a resident or guest at a Property sharing the well.
19 Ensure equal sharing of costs for abandoning all or part of the shared system so that contamination of ground water or other hazards will be avoided.
20 Ensure prompt collection from all parties and prompt payment of system operation, maintenance, replacement or improvement costs.
21 Specify that the recorded agreement may not be amended during the term of a federally-insured or -guaranteed Mortgage on any Property served, except as provided in items 5 and 11 above.
22 Provide for binding arbitration of any dispute or impasse between parties with regard to the system or terms of agreement. Binding arbitration must be through the American Arbitration Association or a similar body and may be initiated at any time by any party to the agreement. Parties to the agreement must equally share arbitration costs.
http://www.emailmeform.com/builder/form/0bfJs9b6bK8TGoc6mQk9hIu
 
Joel Lobb (NMLS#57916)
Senior  Loan Officer
 
American Mortgage Solutions, Inc.
Company ID #1364 | MB73346
 


Text/call 502-905-3708
kentuckyloan@gmail.com

Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant  Equal Opportunity Lender. NMLS#57916 http://www.nmlsconsumeraccess.org/
 
— Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification.
 

FHA eliminates two unnecessary and outdated lending roadblocks

The Federal Housing Administration has taken steps to reduce some of the regulatory burdens that belabor the lending process, releasing two mortgagee letters Tuesday with updated guidelines on home warranty and inspection requirements for single-family FHA loans. FHA Commissioner Brian Montgomery said the moves align with the administration’s goal streamline and update guidelines in an effort to reduce regulatory barriers.

Source: FHA eliminates two unnecessary and outdated lending roadblocksKentucky FHA Guidelines for Inspections and Warranty's

Kentucky FHA Loan Requirements For Loan Approval.

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FHA Handbook 4000.1 Updates

Administration (FHA) Single Family Housing Policy Handbook 4000.1. These updates are effective September 30, 2016 and

 Clarification that an Upfront Mortgage Insurance Premium (UFMIP) refund calculation applies even if original UFMIP was
not financed.
 Mortgage Debt Not Included in Credit Report: Clarification that a manual downgrade is not required when there is no history of late payments, as detailed below.
o Not currently delinquent; and
o No 30 day late payments within 12 months of the case number assignment date; and
o No more than 2 x 30 day late payments within 24 months of the case number assignment date.
 A link has been added in the FHA Product Description from Mortgage Payment History requirements to “Credit History
Requirements for Manually Underwritten Loans.”
 Appliances that add contributory value must be operable.
 Mechanical components and utilities: The appraiser must report the utility, safety, and capacity of the mechanical systems.
The appraiser must observe and operate all applicable mechanical systems and utilities. In conjunction with this guidance,
existing FHA Handbook guidance on the following topics will be added:
o Electrical System
o Heating and Cooling
o Plumbing
o Utilities

If you have questions about qualifying as first time home buyer in Kentucky, please call, text, email or fill out free prequalification below for your next mortgage loan pre-approval.


The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only.  The posted information does not guarantee approval, nor does it comprise full underwriting guidelines.  This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the views of my employer. Not all products or services mentioned on this site may fit all people

Kentucky FHA Appraisal Requirements For A Mortgage Loan Approval.

Kentucky FHA Appraisal Requirements For A Mortgage Loan Approval.

 

  • Ordered through a third party source. Interested/vested parties may not initiate the appraisal. I.E> buyers, sellers, realtors, loan officer, family members
  • Property must meet HUD’s minimum property standards. i.e.: permanent heat source, utilities must be on and in working order at time of inspection
  • Flips < 90 days – not allowed Per HUD -If current owner owned less than 90 days FHA will not insure. Sometimes a second appraisal will be required by FHA investor if sold within the last 6 months for a large profit. Receipts of work done may be needed to substantiate  increase in value of home in short-time period.
  • Transferred appraisal – ok
  • Appraisal valid 120 days – 30 day extension possible*
  • Property eligibility – No location restrictions.
  • New Construction Available

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FHA MORTGAGE LOANS AND FLIPPING RULE FOR APPRAISALS
Resales Occurring 90 Days or Fewer after Acquisition:
 Not eligible for FHA financing
Resales occurring between 91 days and 180 Days after Acquisition:
 Obtain 2nd appraisal if resold between 91 to 180 days after acquisition
 Obtain 2nd appraisal if resale price is 100% or more over price paid by seller
 If 2nd appraisal is more than 5% lower than value of first appraisal, the lower value must be used
 Borrower not allowed to pay for 2nd appraisal
Exceptions to FHA Flipping Rules:
 Property purchased by an employer or relocation company due to relocation of an employee
 Resales by HUD – REO program
 Sales by other government agencies (i.e., IRS, court-ordered, DEA, etc.)
 Sales of non-profit agencies approved to purchase HUD properties
 Acquisition due to inheritance
 Sales of properties by federally chartered financial institutions
 Sales of properties by GSE’s
 Sales of properties by local or state governments
 Sales by builders selling a new home
 Sales of properties in federally declared disaster areas
NOTE: Mortgage Company must obtain a 12-month chain of title to document time restrictions above.
VA MORTGAGE AND FLIPPING RULE

 No Flipping Rules – Overlays may apply or at Underwriter’s discretion

 
USDA RURAL HOUSING MORTGAGE FLIPPING RULES
 Lender is responsible to ensure that any recently sold property’s value is strongly supported when a significant
increase between sale and purchase occurs.
 Lender must ensure that the appraisal value is supported with validated comps and protect the borrower from
predatory lending.

 
Fannie Mae Appraisal Flipping Rules
 No Flipping Rules – Lender overlays may apply
Freddie Mac
 No Flipping Rules – Lender overlays may apply

 

Joel Lobb
Senior  Loan Officer
(NMLS#57916)
text or call my phone: (502) 905-3708
email me at kentuckyloan@gmail.com
The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people. NMLS ID# 57916, (www.nmlsconsumeraccess.org). Mortgage loans only offered in Kentucky.
All loans and lines are subject to credit approval, verification, and collateral evaluation and are originated by lender. Products and interest rates are subject to change without notice.






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