FHA suspends anti-flipping rule for another year
posted by TimHerriage
I will let you know when this is final:
The Federal Housing Administration will suspend its anti-flipping rule for a second year in 2011, a spokesman confirmed to HousingWire Friday.
In 2003, the Department of Housing and Urban Development issued a rule that prohibits the FHA from insuring a mortgage on home that was owned by the seller for less than 90 days. But in February, HUD lifted this ban for one year to accelerate the sale of previously foreclosed homes to investors.
The HUD spokesman said the rule was currently in the clearance process. When the FHA first lifted ban, HUD announced $2 billion in Neighborhood Stabilization Program grants to local communities and nonprofits looking to clear out vacant and abandoned homes.
Not all transactions qualify for the exception. The sales must be done at arms-length, meaning there cannot be a shared interest between the buyer and the seller. The waiver does not qualify for reverse mortgages, and in cases where the sales price of the property is 20% above the seller's acquisition cost, more conditions apply.
"FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties," FHA Commissioner David Stevens said when the rule was first suspended. "This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity."