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Temporary Waiver of HUD's 90-day Flipping Policy
Posted on January 19, 2010
HUD Secretary Shaun Donovan announced on Friday, January 15, 2010, a temporary policy that will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties. Effective February 1, 2010 there will be a one-year temporary suspension of the 90-day flipping policy.HUD's current policy states any resale of a property may not occur 90 or fewer days from the last sale to be eligible for FHA financing.
The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of "flipping" where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general 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. -see below
- The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.
Lender conditions if sold for more than 20% than seller's acquisition cost-
Lender orders a property inspection report at borrower or seller's expense
- Appraiser has to explain why the value has increased since previous sale
- Lender may require a 2nd appraisal to justify increase in valuue
- Seller may have to provide documentation to justify increase in value
To read the entire announcement from HUD, click here
This is great new for buyers looking to purchase a recently foreclosed property.
If you have questions concerning this, please give me a call at (509) 232-7725.
Denelle
