FHA 90-Day Anti-flipping Rule Waived

 

According to the California Association of Realtors (C.A.R), The Dept. of Housing and Urban Development (HUD) announced Friday it will eliminate for one year the Federal Housing Administration (FHA) 90-day flipping rule.

FHA's ant-flipping rule generally prohibits insuring a mortgage on a home owned by the seller for less than 90 days. That rule already has been waived for certain transactions, including REO's. Beginning February 1, buyers may use FHA-insured financing to purchase properties resold through private developers and investors. The one-year waiver will give FHA buyers access to a broader array of recently foreclosed properties.

Under the temporary waiver, all transactions must be made at arm's-length and may require additional documentation of improvements and justification of certain price increases. Additional documentation may include a second appraisal and a property inspection ordered by the lender.

C.A.R recently submitted a letter to FHA Commissioner David Stevens detailing the challenges facing many FHA homebuyers, such as the lack of housing inventory available to them, and the need to revise this rule to reflect current market conditions. The reexamination of the 90-day anti-flipping rule was passed as an action items during C.A.R.'s board of directors meeting in October. Source: California Association of Realtors, www.car.org

This is very good news for our FHA buyers, who were previously excluded from purchasing 90-day flip properties. Since entry level inventory remains low, we are hoping this will help stimulate market activity in the lower price ranges. We will keep you posted as we hear more details on this rule.

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