The Federal Housing Administration's (FHA) Office of Single Family Housing announced that a rule on property flipping will again be effective starting Jan. 1, 2015.
FHA issued a temporary rule waiver after the recession, but that will soon expire. According to FHA, the rule prohibits the use of FHA financing to buy single-family properties that will be resold within 90 days.
The waiver still applies to any sales contracts executed before 11:59 p.m., Dec. 31, 2014. FHA considers a sales contract "executed" when all parties have signed the contract, and the contract is enforceable under state law.
FHA says it will not extend the waiver beyond Dec. 31.
Section 203.37a(c) lists sales transactions that are exempt from the no-flipping rule. They include:
- Department of Housing and Urban Development (HUD) sales by of real estate-owned (REO) properties under HUD's regulations in 24 CFR part 291
- Sales by other federal agencies of REO properties
- Sales of properties by nonprofit organizations approved to purchase and resell HUD REO properties
- Sales by state- and federally-chartered financial institutions and government sponsored enterprises (GSEs, such as Fannie Mae and Freddie Mac)
- Announced HUD sales of properties in areas the President has declared federal disaster areas
Quick links and resources
• Federal Register Notice (Docket No. FR-5397-N-05), "Federal Housing Administration (FHA): Temporary Waiver of FHA's Regulation on Property Flipping; Extension of Waiver"
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