FHA Extends the Flipper Waiver Rules
Many Buyers in the market today are excited to locate and buy a new home with these historic interest rates and current market affordability. Often the homes that they wish to purchase have been recently acquired by investors and remodeled within the last 90 days.
In an effort to continue to stabilize home values and improve conditions in communities experiencing high foreclosure activity, FHA extended the “temporary waiver of the anti-flipping regulations”.
With certain exceptions, FHA regulations had prohibit insuring a mortgage on a home owned by the seller for less than 90 days. This new extension will continue to allow buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. It will also help homes to resell as quickly as possible, working to stabilize real estate prices and to revitalize neighborhoods and communities.
This extension is effective through December 31, 2012, unless otherwise extended or withdrawn by FHA. All other terms of the existing Waiver will remain the same. The Waiver contains strict conditions and guidelines to prevent the predatory practice of property flipping, in which properties are quickly resold at inflated prices to unsuspecting borrowers. The Waiver continues to be limited to sales meeting the following 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 and documents the justification for the increase in value.
- The Waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.
Contact us today at PacifiCal Realty Group to schedule an appointment to sit down with one of our skilled Agents and draft a plan of action that will help you achieve your Real Estate Goals for 2012! We can help guide you through the home buying process and put you in touch with ethical Lenders that can assist you with your financing needs. Give us a call today to get started at 619-987-7221!
Posted on: Wednesday the 28th of December 2011.
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Written by: Ernesto Rivera