Strict 90 Day Flipping Rule Lifted by Feds
Selling a house will soon become easier for fix and flip investors, while buyers stand to also gain by a recent regulation ease. HUD currently restricts availability of an FHA insured loan if the seller has held title less than 90 days. HUD Secretary Shaun Donavon announced on Friday that this policy will be waived for a period of 1 year beginning February 1st 2010. This waiver will expand access to FHA lending programs to allow quick resale of foreclosed homes. This should give buyers greater access to low priced remodeled homes that they couldn’t purchase before.
FHA is generally the only option for buyers who don’t have the 20% down payment needed to secure a conventional mortgage. In tight credit markets, many borrowers turn to these programs because of the low down payment requirements. The waiver should help absorb an expected early year spike in foreclosure inventory.
The determination by HUD is clear, this action will ‘help facilitate the return of repaired and habitable properties to the market in a timely fashion.’ *
This relax in policy will not come without oversight. Secretary Donavon said, “This change in policy is temporary and will have very strict conditions and guidelines to assure that predatory practices are not allowed”.
Conditions include:
• 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.
Full language and additional detail of the waiver can be downloaded HERE .
About Alliance Bid Services LLC: Phoenix real estate investment services specializing in foreclosure property acquisition through trustee sales. Offering bid representation services at live auctions across Arizona. The service allows buyers direct bidding live via web or phone from any location on the globe.
Contact:
Don W. Juvan, Investment and Bid Consultant
Alliance Bid Services LLC
480-444-6110
www.phoenix-foreclosure.com