FHA 90 Day Flip Rule Is Waived for 1 Year
HUD has ruled on waiving the 90 day seasoning financing contingency for buyers. What does this mean?
Effective February 1st 2010, FHA/ HUD will not require that a seller of a property be on title for 90 days or more in order to sell the property to a borrower acquiring FHA financing. This is an incredible opportunity for the majority of buyers & sellers in today’s market.
Investment Properties, Flips, Foreclosures, Short Sales
This news is an important decision handed down by HUD as it propsed to dramatically assist the real estate market recovery.
FHA’s 90 Day Anti Flip Rule
Prior to HUD’s decision, HUD required that a seller had to hold onto the title of the property for a period of 90 days after settlement date. This has always affected an investor’s decision in accepting an offer made on the investment property by a FHA Approved Buyer. This will all change on February 1st for a temporary period of 1 year.
Below is an excerpt from the HUD website:
“In today’s market, FHA research finds that acquiring, rehabilitating and the reselling these properties to prospective homeowners often takes less than 90 days. Prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition adversely impacts the willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-day period of time.
The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.”
This great news obviously comes with some restrictions. However, they are minimal but important when looking at the new rule. REMEMBER, THIS IS FOR ONE (1) YEAR ONLY!! I anticpate that if it has the expected results, the rule may be extended for a longer period.
The New FHA 90 Day Flip Rules
The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner.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 those 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.
•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.
You can learn more by visiting HUD’s site CLICK HERE
ABOUT TED CANTO
Ted is an experienced Mortgage Advisor for the last 13+ years and is also known for his mortgage commentary and internet workshops within the real estate community. Also known as "The Mobile Mortgage Pro", Ted has honed the power of the smart phone, laptop, tablet computing, text, email and social media to ensure that he is always accessible to his clients' “wherever, whenever” to meet their needs. Ted has helped thousands of families finance their new home or refinance their current home in the Arizona and California market. Call, text, or email him to discuss your home financing @ 480.650.8602 or ted@tedcanto.com
Ted Canto
