HUD Lifts the 90 day ban on reselling homes. So What?
There are quite a few buyers who do not want to or cannot wait for a short sale or don't want to mess with all the red tape involved in an REO. Wouldn't it be nice if there were a NORMAL seller with a NICE house that can close in 30-45 days? Guess what? There are!!! They're the investors that are buying the foreclosures, rehabbing them, and then putting them back on the market. They are not evil, they are repairing the housing stock that normal lenders would never lend on due to condition. But they were being penalized by the fact that your Buyer couldn't get an FHA loan just because the seller hadn't owned it for 90 days yet.
Well, as of February 1st they're lifting that restriction (at least for a year). There still are some hoops to jump through
1) must be an arms-length transaction
a. seller must be legal title holder (no assignments)
b. if seller is a trust, corp, or LLC, must be legal and registered
c. no pattern of previous flips on the property (12 month lookback, no "chains"
d. property must be openly marketed in MLS, auction, FSBO (no pocket listings)
2) if the property sales price is 20% or more above the acquisition cost, then the buyer's lender must justify their underwriting by:
a. including supporting documentation or a second appraisal about why the property value increased or the repairs that were made on it AND
b. orders a property inspection and gives a report to the buyer. The buyer CAN be charged for this report.
If you want to read the actual HUD release, CLICK HERE