FHA 90 day Property Flipping RULE for Re-sale of Property

I recently had an experience working with an investor that wanted to sell a home he had just purchased.  He found a buyer within a week and I took the loan application as an FHA loan and turned the file into my processor and told her we wanted to close the loan in 15-21 days.  She waited until the home inspection was done and the seller had worked out all the issues that came up and then pulled the case number for an FHA loan.

WRONG!!!!!!    Now there will be no FHA financing until after 180 days have passed.   So we needed to use another loan product, the My Community loan from Fannie Mae and the borrower needed to save 5% of her own money.

Here is an excellent post by Paul Bozek, from Sacramento, CA....Thanks Paul!

http://activerain.com/blogsview/499342/Resale-of-property-withinI

Paul states "Resales Occurring 90 Days or Less Following Acquisition

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.

Exceptions to 90-day Restriction

The following sales are exempt from the time restrictions provided by §203.37a:

· Sales by HUD of its Real Estate Owned

· Sales by other United States Government agencies of single family properties pursuant to programs operated by these agencies.

· Sales of properties by nonprofits approved to purchase HUD-owned single-family properties at a discount with resale restrictions.

· Sales of properties that are acquired by the sellers by inheritance.

· Sales of properties purchased by employers or relocation agencies in connection with relocations of employees.

· Sales of properties by state and federally charted financial institutions and Government Sponsored Enterprises.

· Sales of properties by local and state government agencies.

• Upon FHA's announcement of eligibility in a notice (i.e., ML), sales of properties located in areas designated by the President as federal disaster areas, will be exempt from the restrictions of the property-flipping rule. The notice will specify how long the exception will be in effect and the specific disaster area affected."