FHA Extends The 90-Day Anti-Flipping Rule To Help FHA Buyers Purchase Homes Not Owned By Sellers For 90 Days…
Last Thursday, the Federal Housing Administration extended its “90-Day Anti-Flipping Rule” through the end of 2012.The extension of this waiver will allow Buyers, using FHA-backed loans, to purchase any homes that have not been owned by a property owner for 90 days. Such types of homes are usually “Investor Owned or Flip Properties”.
The “90-Day Anti-Flipping Rule” which originally took effect back in 2003, was created to prevent FHA-backed loans from being used to purchase homes that had been owned by a Seller for less than 90 days. The rule supposedly was used to try and curve the spike in home flipping that was being blamed on driving up home prices during the housing boom.
The Department of Housing and Urban Development decided to reconsider the “90-Day Anti-Flipping Rule”, which was set to expire in late 2010, to help investors absorb foreclosures and abandoned homes, which are causing blight in neighborhoods across the country and enable FHA-backed Buyers to purchase them.
The temporary waiver to the “90-Day Anti-Flipping Rule” will allow buyers and investors to quickly resell renovated homes and not have to wait 90 days to do so. Since the waiver took place in 2010, FHA has insured nearly 42,000 mortgages worth more than $7 billion on homes resold within 90 days of the last purchase.
Although the “90 Day Anti-Flipping Rule” has been extended, it still prevents predatory flipping by investors who own these properties. Sellers must justify any increases in value if the sales price of the property is 20 percent more than what the Seller had recently purchased it for. In addition, two appraisals are required to be done on these types of properties, to protect the Buyer from overpaying for the home & re-confirm the homes value.