FHA extends the anti-flipping waiver to help home sales - PowerteamHomes.com

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FHA Home OwnershipOn December 28, 2011 the FHA extended its waiver of a rule that prohibits the agency from insuring homes sold within 90 days of their acquisition. The anti-flipping regulation was
designed to prevent activity that could be harmful to neighborhoods.
While the law was created to maintain stability in the housing market, the FHA temporarily
waived it back in 2010, saying a reprieve would allow buyers to acquire HUD-owned properties,
bank-owned properties and private homes for the purpose of improving them and selling them to
revitalize the neighborhoods.

The waiver is set to expire on January 31, 2012; however, it will now be in effect through
December 31, 2012.

“This extension is intended to accelerate the resale of foreclosed properties in neighborhoods
struggling to overcome the possible effects of abandonment and blight,” said Carol Galante,
acting FHA commissioner. “FHA remains a critical source of mortgage financing and stability
and we must make every effort to promote recovery in every possible way we can.”

The waiver is subject to certain restrictions and it stipulates that all qualified transactions must be
at arms-length, meaning parties to the deal cannot be striving to achieve some type of kick-back
or special interest separate from buying and selling of the real estate.

When the sale price of the property is 20% or more above the seller’s acquisition cost, the waiver
will only take effect if the lender meets all criteria and provides documents that justify the price
increase, according to FHA. The waiver only applies to forward mortgages, and is not available
for home equity conversion mortgages.

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