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FHA Flip Rules Update!

Reblogger
Real Estate Broker/Owner with The Jordon Wheeler Group GA License# 264359

This post features an update on the flip rules pertaining to FHA insured mortgages.  Since FHA insured mortgages make up about 80% of the loans in Georgia nowadays, this information is good for buyers and particularly real estate investors.  Flipping is still alive and still pretty risky.  Not for the novice real estate investor.

Original content by Manny Alfelor / Loan Officer NMLS 545192

*The following 5 rules apply to a property that is being resold within 90 days with > 20% profit to the seller!

1. 2nd Appraisal is required if > 20% profit within 90 days (buyer can't pay for it)

 


2. Home inspection is required on all flips (all repairs called out by appraiser must be fixed by seller prior to funding)

 


3. Health & Safety repairs (Any noted on inspection report repaired by funding)

 


4. All transactions must be arms-length (NO identity of interest between parties)

 


5. A minimum 12-month chain of title required (can't be flipped twice in 12 months)

 

Manny Alfelor / Mortgage BankerSan Diego / BluFi Lending / (619) 972-3209

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Comments (4)

Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

I do not understand the flip rules they are there and I understand the meaning.  Who are we protecting?  Is there such a thing as to much profit. 

Dec 27, 2011 04:53 PM
Jordon Wheeler
The Jordon Wheeler Group - Fairburn, GA
J W Group Real Estate Sales and Service

Tim, you pose a great question and a lot of investors I work with have the same question.  I know in Georgia we have had a tremendous amount of mortgage fraud, possibly the highest in the nation.  So perhaps FHA is protecting itself and the tax payers from this type of fraudulent activity.  Best of success to you sir!

Dec 27, 2011 05:03 PM
Anonymous
Mark

Great summary.  If the buyer can show he paid 20k  he can sell for about 24.   If buyer adds 10k to the house in repairs he can sell for 30k plus 20% is my understanding.  http://www.aohomesolutions.com 

Dec 28, 2011 02:36 AM
#3
Jordon Wheeler
The Jordon Wheeler Group - Fairburn, GA
J W Group Real Estate Sales and Service

Good morning Mark,

Your logic sounds right, but I know the last word will be with the appraiser.  Maybe we get an appraiser to chime in on this post.  Best of success to you in 2012!

Dec 28, 2011 02:42 AM