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FHA Extends 90 Day Property Flipper Waiver

Posted by Benjamin Dona on Sunday, January 30th, 2011 at 2:36pm.

FHA News-HUD Extends Waiver for Property FlippersBack 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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About the Author

Gulf Coast Associates, RealtorsBenjamin Dona is the Broker and Owner of Gulf Coast Associates, Realtors in Bonita Springs, Florida. He holds two advanced degrees, an MBA and an MA, and has an extensive background in both business and marketing. In 1998, he founded Gulf Coast Associates, and formed a group of like-minded Realtor® associates dedicated to offering professional Southwest Florida real estate services by concentrating on information, education and the use of leading edge technologies. He also is a recognized expert on the "Net," a much-quoted and read blog author, and a contributor to both national and international news outlets. Benjamin is a member of the National Association of Realtors, the Florida Association of Realtors, and numerous local real estate boards throughout Southwest Florida.

Contact Benjamin Dona at 239-948-3955



5 Responses to "FHA Extends 90 Day Property Flipper Waiver"

Elyse Coleman wrote:
What seems to get a lot of people in trouble when they attempt to "flip" a home is that they'll try to arrange to have a buyer on hand before the home is officially theirs. In a sense, they're acting as both buyer of the original property and a third party seller. There's some obvious reasons as to why this is problematic; if the individual in question is unable to buy the home to resell, the buyer with whom they already made plans to resell the home to is stuck. It's like having another person buy your home for you only so you can pay them more money then the original seller is actually asking.

Posted on Tuesday, February 1st, 2011 at 5:01pm.

Mark Ciochon wrote:
Amen! Most of the foreclosed property in our area are far from turnkey, so they must do mold removal, trash out, paint, carpet etc., and then the home is really marketable for buyers who don't have 30 or 40% for a down payment. Flippers allow trashed homes to be fixed up and resold to the general public...I hope they continue to extend this policy.

Posted on Monday, February 7th, 2011 at 11:41am.

Robin in Pensacola wrote:
+1 for Mark's comment. We have inventory that needs to move and if it takes a flipper to come in and do the necessary renovations, then so be it. Without someone willing to do the clean up/clean out work, these homes will sit and further depress our housing markets. A permanent change to this FHA policy is in order.

Posted on Monday, February 7th, 2011 at 5:23pm.

Frank Rush wrote:
Completely agree with Robin and Mark. Although you have to take a thorough look at a house that has been flipped and make sure corners were not cut, they definitely help get things moving.

Posted on Sunday, February 27th, 2011 at 10:12pm.

Benjamin wrote:
Here's a post by a colleague from Sarasota about the ongoing downside (still to this day) in the flipping market:

44 Flipping Fraud Indcitments Announced

Posted on Sunday, February 27th, 2011 at 10:21pm.



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