FHA Extends Anti-Flipping Waiver for Home Buyers
Posted 01-14-2012 at 03:44 PM by Sunshine Rules
The Federal Housing Administration (FHA) is extending its “anti-flipping” waiver through the end of 2012, allowing buyers to purchase homes that have already been sold in the last 90 days.
An anti-flipping rule originally took effect in 2003 to stop an increase in home flipping that was being blamed on driving up home prices during the housing boom. The rule prevented FHA-backed loans from being used to purchase homes that had been owned by a seller for less than 90 days.
The U.S. Department of Housing and Urban Development (HUD) decided to reconsider the 90-day limit in 2010 after skyrocketing foreclosures and abandoned homes were causing urban blight in many neighborhoods across the country, thereby affecting nearby property values.
The temporary waiver to the anti-flipping rule will allow buyers and investors to quickly resell refurbished homes and not have to wait 90 days to do so.
The waiver still prevents “predatory” flipping, and sellers must justify increases in value if the sales price of the property is 20 percent more than what the seller had recently purchased it for (i.e. provide extra documentation on renovation expenses). Sales also must be in “arms-length,” in which there is no identity of interest between the buyer and seller or other parties participating in the sales transaction.
This is good news for buyers in our area looking to purchase a home using FHA financing, as it will increase the inventory of homes available to them in what is quickly becoming a tight market for homes priced under $250,000.
An anti-flipping rule originally took effect in 2003 to stop an increase in home flipping that was being blamed on driving up home prices during the housing boom. The rule prevented FHA-backed loans from being used to purchase homes that had been owned by a seller for less than 90 days.
The U.S. Department of Housing and Urban Development (HUD) decided to reconsider the 90-day limit in 2010 after skyrocketing foreclosures and abandoned homes were causing urban blight in many neighborhoods across the country, thereby affecting nearby property values.
The temporary waiver to the anti-flipping rule will allow buyers and investors to quickly resell refurbished homes and not have to wait 90 days to do so.
The waiver still prevents “predatory” flipping, and sellers must justify increases in value if the sales price of the property is 20 percent more than what the seller had recently purchased it for (i.e. provide extra documentation on renovation expenses). Sales also must be in “arms-length,” in which there is no identity of interest between the buyer and seller or other parties participating in the sales transaction.
This is good news for buyers in our area looking to purchase a home using FHA financing, as it will increase the inventory of homes available to them in what is quickly becoming a tight market for homes priced under $250,000.
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