HUD has just extended the waiver of the 90 day seasoning for REOs being sold to FHA customers. They have extened it to May 10th 2010. That means you can sell an REO to an FHA borrower immediately. No waiting the 90 days.. sounds like a challenge. This includes the 203b and 203k.
Property Flipping has been frowned on and considered illegal by HUD for quite a while. I remember having them in my office once years ago telling me just that. I had purchased a property at a wholesale price, and sold it a few days later for a nice profit... they lectured me on how that was illegal. I then suggested that I had a grocery store and purchased bread at a wholesale price, put a markup on that bread and resold it later that same day to achieve my profit. The fact was that the property I sold, without doing anything to it, was sold under market by me as well. I finally was able to convence them what I had done was normal in the course of real estate business. I never heard from them again so I guess they agreed.