FHA Waives 90 Day Flip Rule

The govt has announced a temporary policy that will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties. This move was in an effort to stabilize home values and improve conditions in communities where foreclosure activity is high.

The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner.
To protect FHA borrowers against predatory practices of “flipping” where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to property sales meeting the following general conditions:

· All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction, ie for example, sales can’t be between family members.

· In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions.

· The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.

Specific conditions and other details of this new temporary policy are in the text of the waiver, available on HUD’s website .

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Tagged as: arizona foreclosures, FHA lending, flipped property

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