As of February 1, 2010, HUD has temporarily relaxed the 90 day flipping restriction on FHA loans, subject to a given purchase transaction meeting the requirements as follows:
- All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
- The seller holds title to the property
- The property was marketed, openly and fairly, via MLS, auction, or For Sale by Owner
- In cases where the sales price of the property is 20% or more and above the seller’s acquisition cost, the wavier will only apply if the lender;
- Justifies the increase in value by having a second appraisal that verifies legitimate renovations, repair and rehabilitation work on the property to substantiate the significant increase in property value
- Orders a property inspection and provides the inspection report to the purchaser before closing
- The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for Purchase program
The waiver is valid for one year from February 1, 2010. The waiver has been put in place to help facilitate the return of repaired and habitable properties to the market in a timely fashion. This policy change will help promote the sale of properties that would otherwise remain vacant for 90 days, while offering affordable housing options to buyers wishing to use FHA-insured financing.
For more information on the new waiver on flipping restrictions on FHA loans, please contact me for more information Kevin.Toll@nulllongandfoster.com