Temporary waiver of certain part of FHA property Flipping rule

HUD will now allow all mortgage lenders to
sell foreclosed property with FHA financing without regard to the date they
acquired the property. Previous to this, only Federally chartered banks
and credit unions and the GSEs (FannieMae and FreddieMac) and HUD were allow
this exemption.

Please be aware this does not apply to private investors or any other
individuals, who still must wait the 90-day seasoning period before they can
sell a home with FHA financing. Also, the two appraisal requirement (when
applicable) is still required for private investor sales.

Temporary Property Flipping Waiver:
The temporary waiver of the property flipping rule will permit lenders to
more easily sell properties acquired as a result of foreclosure to
homebuyers who use FHA financing. Both lenders and the property disposition
firms they hire (or with whom they are affiliated) are now exempt from the
90-day lock-out period that once prevented homebuyers from using FHA
financing to purchase properties that were owned by an individual/entity
that held the property for less than 90 days. Under the new waiver, homes
that were foreclosed on and are being sold by the mortgage holder or on its
behalf may be purchased by FHA borrowers without regard for the 90-day
seasoning period. To prevent future flipping of any properties purchased
through the foreclosure sales, the subsequent sales of the properties will
continue to be subject to the standard regulatory requirements - lockout for
the first 90 days and two appraisals required to justify any increase in
value of 100% or more for sales that occur within 90 to 180 days.

The waiver is effective for all FHA mortgage insurance endorsement requests
on or after June 9, 2008 and expires for all loans for which the sales
agreements were signed by the seller and buyer prior to June 8, 2009. Again,
the exemption applies only to the initial sale of a foreclosed property and
does not extend to a subsequent sale of that property.

FHAConnection is being modified to permit lenders to enter specific data
about the waiver eligibility on foreclosed properties, on the Appraisal
Logging screen. The systems modifications will be completed by early next
week. Although lenders will not be required to submit documentation
requesting a waiver on the foreclosure transaction to the applicable

Homeownership Center prior to entry of appraisal logging data, lenders must
include this documentation in the endorsement file. Further instructions are
forthcoming about the system modifications and will be posted on the FHA
Message Board.