FHA Extends 90 Day Property Flipper Waiver
Posted by Benjamin Dona on Sunday, January 30th, 2011 at 2:36pm.
Back in January of last year, HUD announced it was waiving its rule of prohibiting the 90 day waiting period for obtaining an FHA mortgage on a flipped property. The change was originally intended to temporarily help boost the sagging housing market and was set to expire on January 31, 2011.
On Friday of last week, FHA Commissioner David Stevens extended the "anti-flipping rule" waiver through January 31, 2011, and said the move was based on HUD's intention to help "accelerate the re-sale of foreclosed upon homes in neighborhoods struggling to overcome the possibility of property abandonment and blight."
The wavier action permits buyers to continue to use FHA financing to purchase flipped foreclosures including HUD-owned properties, bank-owned properties, and properties resold through private sales. HUD's hope is it will allow homes to resell as quickly as possible thereby helping to stabilize real estate prices and to revitalize neighborhoods and communities more quickly.
Just be aware, strict protections apply to "flipped properties" eligibility. For instance:
- All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
- a 20% (general limit) in the increase in selling price.
- The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) program.
In addition, investors and buyers should recognize that individual lenders have the right to set up their own more strict guidelines regarding "flips," so it's important to do your investigation and get an actual approval prior to writing a flipper contract.
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