FHA Extends 90-day Flip Rule for California Homes till December 31, 2012

Mortgage and Lending with Arcus Lending NMLS 8176

In an effort to continue stabilizing home values, Acting Federal Housing Administration (FHA) Commissioner Carol J. Galante has today extended FHA’s temporary waiver of the anti-flipping regulations through December 31, 2012 for California and rest of the country.

With certain exceptions, FHA regulations prohibit insuring a mortgage on a home owned by the seller for less than 90 days.  In 2010, FHA temporarily waived this regulation through January 31, 2011, and later extended that waiver through the remainder of 2011.  The new extension will permit buyers to continue to use FHA loans to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. It will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities. This is a great news for Investors as well who can draw from a much bigger pool of FHA qualified buyers who can buy the properties in less than 90 days after being acquired by them.

All other terms of the existing Waiver will remain the same.  The Waiver contains strict conditions and guidelines to prevent the predatory practice of property flipping, in which properties are quickly resold at inflated prices to unsuspecting borrowers.  The Waiver continues to be limited to sales meeting the following conditions:

  • All transactions must be arms-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 percent or more above the seller’s acquisition cost, the Waiver will only apply if the lender meets specific conditions and documents the justification for the increase in value.
  • The Waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.

I have done several of these loans in last few months and would be glad to guide you whether you are a seller selling a property acquired within last 90 days or a buyer buying such a property.

You may also like to read - FHA Mortgage Insurance Premium goes up again

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Shashank Shekhar

Mortgage Broker/Banker | San Jose, CA

(408) 615-0655 | Shashank@ArcusLending.com

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Comments (5)

Pamela Seley
West Coast Realty Division - Murrieta, CA
Residential Real Estate Agent serving SW RivCo CA

Thank you for the information. This will be a big hep to communities and good news for investors. Much success to you in 2012 !

Dec 22, 2011 10:16 AM
Shashank Shekhar
Arcus Lending - San Jose, CA
San Jose, CA Mortgage Broker/Lender

I am glad you found the information useful Pamela. Its literally hot off the press - came out few minutes back. Great news to take back to your investors and buyers.

Have an awesome 2012.

Dec 22, 2011 10:28 AM
Dorian Moffat
Halo Group Realty - Allen, TX

That's great news! I certainly think it will help certain areas get back on their feet. The investors, for the most part, are part of the solution.

Dec 22, 2011 10:37 AM
Shashank Shekhar
Arcus Lending - San Jose, CA
San Jose, CA Mortgage Broker/Lender

I agree with you Dorian. Between First Time Home Buyers and Investors it's almost 90% of the market in most areas.  And this helps both of them. After closing several of these deals this year, I was wary that FHA might not extend it for 2012 given their problems.

Dec 22, 2011 10:47 AM
Shashank Shekhar
Arcus Lending - San Jose, CA
San Jose, CA Mortgage Broker/Lender

Hi Augie,

Here is the source - http://screencast.com/t/BTloH3ZEowR

Its a scrrenshot of email that I received directly from HUD. I am on their direct email list. it also has the website addresses where you can find the same details. Hope that helps!

Dec 27, 2011 08:29 AM