For the second consecutive year, the Federal Housing Administration has extended it's temporary "anti-flipping" waiver meaning homebuyers purchasing homes which have changed ownership during the last 90 day period may continue to rely upon FHA-insured financing
This waiver is a godsend for investors rehabbing and then flipping properties, as it enlarges the eligible borrower pool to include those requiring on FHA-insured loans, popular with every first-time homebuyer and others short on the funds for a big down payment.
FHA said,. In extending their waiver through the end of 2012, FHA said that every sale must continue being arms-length transactions. For situations where the property sales price exceeds 20 percent the seller’s initial acquisition cost, a waiver will only apply where the lender is able to document justification for increases in value,
FHA put this anti-flipping rule into effect during 2003 to protect the mutual mortgage insurance program (MMIP) from losses from homes which were simply flipped, rather than being rehabbed. Homes foreclosed on by Freddie Mac, Fannie Mae, plus federal and state financial chartered institutions were exempted from this rule.
In February of 2010, the Obama White House administration waived the resale waiting period -- including homes acquired and rehabilitated by private investors -- with the hopes of revitalizing communities and stabilizing home prices affected by foreclosures.
It most often takes under 90 days to purchase, rehabilitate and resell properties, HUD said at that time. Some rehabbed properties sellers had voiced reluctance in entering into purchase agreements with FHA buyers die to the added expense of holding on to a property for a 90 day period, HUD had said.
As they extended the waiver through the end of 2011, FHA stated it had insured over 21,000 properties in the 90 day flip category worth over $3.6 billion during 2010 that would have otherwise not qualified for financing. That figure has since expanded to almost 42,000 mortgage loans worth over $7 billion for properties that were resold within a 90 day time frame of initial acquisition.
Dec 31, 2011