Richard's Real Estate Thoughts - Chattanooga TN Mortgage Lender: January 2011

FHA Flipping Waiver Extended

FHA announced it will extend the property flipping waiver until December 31, 2011, This flipping waiver had previously been in force through January 31,2011.

The waiver basically allows properties purchased within the last 90 days to be sold with FHA financing, withFHA property flipping waiver extended a 20% cap on price increase.

In the announcement, FHA Commissioner David Stevens said, "As I noted when we first announced this policy change early last year, because of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential homebuyers."

"Today I can report that this policy change has been effective.  Since the original waiver went into effect on last February, FHA has insured more than 21,000 mortgages worth over $3.6 billion on properties resold within 90 days of acquisition."

FHA property flipping waiver extendedThe flipping rules are in place to prevent properties from being resold with nominal improvements to unsuspecting buyers at above market, "inflated" prices. It is basically a protection against predatory home selling practices.

The existing flipping policy prohibits sales within 90 days of the original purchase, and places limits on property sales that take place between 90 and 360 days of the original purchase.

The property flipping waiver that was announced in January 2010, and is now extended, opens the market to resales within the first 90 days, with the following restrictions:

  • 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

This is generally good news, and FHA indicates that the waiver has helped increase home sales. Typically though the 20% above acquisition cost limit is still restrictive for most resales, as the low number of 21,000 resales indicates.

With current tightened lending and appraisal guidelines in place, I suspect that the HUD flipping rules are not needed to prevent resales at "inflated" prices.

Anyway the waiver extension is good news.  

Here is the link to the flipping waiver notice.

Here is the link to the FHA press release of the waiver extension.

 


Thank you for visiting. This is the professional blog for

Richard Smith

Conventional, FHA, FHA 203k, HUD $100 down purchases, VA, Jumbo VA, Rural Development, Jumbo, FannieMae Homepath, Home Equity Line of Credit (HELOC).
Lending in Chattanooga, Tennessee and Georgia for over 20 years.

Cell phone: 423-280-0345 Email: Richard@HomeLoansChattanooga.com

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Thank you for visiting. This is the professional blog for

Richard Smith
NMLS# 184479 TN# 104002 GA# 28928 

Conventional, FHA, FHA 203k, HUD $100 down purchases, VA,

Rural Development ( USDA), and Jumbo Loans


Lending in Chattanooga, Tennessee and Georgia for over 20 years.

Sierra Pacific Mortgage

Cell phone: 423-280-0345 Email: Richard.Smith@SPM1.com

Visit my website to inquiry about a home loan.

Read my most recent articles in Scotsman Guide.

This blog represents the opinions of Richard Smith. The posts and comments written on the blog do not represent the opinions or positions of Sierra Pacific Mortgage. 

Comment balloon 57 commentsRichard Smith • January 30 2011 08:20AM
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