HUD Makes it Easier to Purchase "Flipped" Properties!!
Today, January, 15, 2010, HUD secretary Shaun Donovan announced that this temporary policy will allow for a quick resale of foreclosed or recently acquired properties. This will take effect on February 1, 2010 and will be effective for one year. unless it is extended or withdrawn by the FHA Commissioner. HUD is trying to help stabilize home values and improve conditions in communities where foreclosure activity is high. It is also more risky for homes to sit vacant for so long.
You may have heard of the "90-Day Flip Rule." What this means is, if a home has been bought back by the investor due to a foreclosure, OR if a home had been purchased with the intent to be fixed up and sold or "flipped," it can't be resold to an FHA buyer for 90 days. In 2008, HUD made an exception to this rule and excluded banks that had foreclosed on properties. As with any program, there are certain guidelines. Some of the guidelines are:
- The transaction must be an arms-length transaction which means the seller and buyer are not related or in some cases it may be that they do not know each other at all!
- If the sales price is 20% or more above the sellers cost to acquire the property, the lender must meet specific conditions.
You also need to be aware that each bank has their own requirements when lending on homes. Just because HUD says it's OK to buy a flipped home, the bank giving you a loan to buy the property may not agree. Be sure that your real estate agent talks to your lender before you make an offer on one of these flipped properties.
To see all the details of this policy read HUD's Waiver of Requirements.
You can read the full article by visiting the HUD Website.
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