Tuesday, December 4, 2012

FHA Anti-Flip Waived for Another Two Years

The anti-flip waiver for FHA buyers was extended last week through 2014.

What does that mean to you, you ask?

Back in 2003 FHA put a policy in place making a standard 90-day Anti-Flipping rule. You just couldn't purchase a home that had been bought less than 90 days ago if you were using FHA financing for your loan.

With the housing crisis, FHA made it's first waiver of the rule, with a few stipulations still in place of course, in 2010. Since that time they have insured eleven billion worth of mortgages on over sixty-two thousand homes.

Requirements that continue:

1) All purchases must be 'Arms-Length' with no one person involved having a relationship with another in the purchase. Lenders have to insure that the seller actually does hold title (I know seems like a no-brainer, but remember, double escrows have occurred). And, the property in question should not have been 'flipped' in the prior 12 months.

2) There should not be more than a 20% increase in the sale price than what the seller paid for it unless there is documentation showing the work done to reflect that larger price difference.

3) An inspection must be completed and if there are any structural or healthy & safety defects, those repairs must be completed prior to close of escrow.

So, again, what does this mean to you?

Extending the anti-flipping waiver for a full two years allows investors and buyers the opportunity of knowing they have some definite time to complete sales and re-purchases. Since so many buyers are utilizing FHA financing, the waiver opens up more home possibilities to them in a time when inventory is so low. It also keeps the investors buying these homes, doing work that an FHA buyer would likely not be financially able to do, and therefor again allows more homeowners a purchase plan. Investors that buy homes are sometimes paying significantly higher, short-term, interest rates. So, the faster they know they can re-sell, the more likely they are to buy, re-hab, and re-sell.

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