Acting Federal Housing Administration Commissioner Carol J. Galente has extended a temporary waiver of FHA's anti-flipping regulations through 2012 in hopes to assist the rehabilitation of the current housing market.
This waiver bypasses the FHA rule that prohibits insuring a mortgage on homes owned by a seller for less than 90 days. The original waiver was placed into action in 2010 through January 31st, 2011. The extension was announced to be effective through December 31, 2012 and all other terms of the waiver will remain the same.
As Galente states, "This extension is intended to accelerate the resale of foreclosed properties in neighborhoods struggling to overcome the possible effects of abandonment and blight. FHA remains a critical source of mortgage financing and stability and we must make every effort to promote recovery in every responsible way we can."
The Waiver is limited to sales meeting the following conditions:
- All transactions must be arm's-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% or more above the seller's acquisition cost, the Waiver will apply only if the lender meets specific conditions, and documents the justification for the increase in values.
- The Waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.
To read the official Waiver, click here.