The rule as originally stated:

To be eligible for a mortgage insured by FHA, the property must be purchased from the owner of record and the transaction may not involve any sale or assignment of the sales contract. This requirement applies to all FHA purchase money mortgages regardless of the time between resales.

If the owner sells a property within 90 days after the date of acquisition, that property is not eligible security for a mortgage insured by FHA unless it falls within one of the exceptions to the time restrictions on resales set forth in §203.37a(c) of the regulations. FHA defines the seller's date of acquisition as the date of settlement on the seller's purchase of that property. The resale date is the date of execution of the sales contract by the buyer that will result in a mortgage to be insured by FHA.

The FHA 90-day no-flip time restrictions will be waived when the sellers of properties to be financed are:

• HUD itself, disposing of its REO (real estate owned) acquired property portfolio.
• Sales of properties that were acquired by the sellers through an inheritance.
• Fannie Mae, Freddie Mac or other federally-chartered financial institutions disposing of REO.
• Local or state housing agencies.
• Nonprofit organizations that have previous approvals to purchase HUD REO properties at a discount.
• Properties located in a presidentially-declared disaster area, provided FHA has issued a formal announcement of eligibility for a specific disaster area.

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