FHA EXTENDS ANTI-FLIPPING WAIVER
Source: Coldwell Banker Home Loans Mortgage Update

In an effort to continue stabilizing home values and improve conditions in communities experiencing high foreclosure activity, FHA has extended its temporary waiver of the agency's anti-flipping rule. The extension, announced on January 28, 2011,is intended to accelerate the resale of foreclosed homes in areas struggling to overcome possible property abandonment .

With certain exceptions, FHA regulations prohibit insuring a mortgage on a home owned by the seller for less than 90 days. Early last year, FHA temporarily waived this regulation through January 31, 2011. This action will permit buyers to continue to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. It will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.

It’s interesting to note that since the original waiver went into effect last February, FHA has insured more than 21,000 mortgages worth over $3.6 billion on properties resold within 90 days of acquisition. Because of past restrictions, FHA borrowers have often been shut out from buying affordable properties. This action enables borrowers, especially first-time buyers, to take advantage of this opportunity and buy a home that has recently been rehabilitated. It will also help to move more foreclosed properties off the market and reduce the number of vacant homes in neighborhoods throughout this country.

The extension is effective through December 31, 2011, unless otherwise extended or withdrawn by FHA. All other terms of the waiver will remain the same, and HUD continues to invite public comment on it. The waiver contains strict conditions and guidelines to assure that predatory practices are not allowed.

To protect FHA borrowers against predatory practices of "flipping" where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver continues to be 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.

Here is the website for the HUD waiver or feel free to call me if you would like more detail: http://www.hud.gov/offices/hsg/sfh/currentwaiver.pdf

Bob Dohn
Coldwell Banker Residential Brokerage
140-A S. Roselle Rd., Schaumburg, IL 60193
Direct phone: 847-301-3126
Web: www.BobDohn.com