FHA Underwriting Guidelines     

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FHA Property Flipping

HUD - FHA has waived their 90 day flipping rule for one year beginning February 1st, 2010.  It has been extended through 2012.

FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. This temporary waiver will give FHA borrowers access to a broader array of recently foreclosed properties.

The change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.

The waiver will take effect on February 1, 2010 and is effective for one year. (extended through 2012)  This waiver is limited to those sales meeting the following general conditions:

  • 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.
  • The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program. 
    Specific conditions and other details of this new temporary policy are in the text of the waiver, available on HUD's website.

Link to new flipping underwriting guidelines in pdf format:
http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf

Link to HUDs press release:
http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-011

 

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