When asked if the FHA will now allow flip sales, prominent closing attorneys, Weissman,Nowak, Curry and Wilco had this to say:
"As a matter of fact, yes, subject to some restrictions. Up until now, FHA would not insure a loan if the sales contract was dates within 90 days of the seller's purchase of the property. In other words, to qualify for FHA financing, the seller had to have owned the property for longer than 90 days. However, by memorandum dated January 15, 2010, David H. Stevens. Assistant Secretary for Housing - Federal Housing Commissioner, issued a one year waiver (effective February 1, 2010 through January 31, 2011) from this. Starting February 1, 2010, FHA will insure a loan even through the seller owner the property for less than 90 days.
The following conditions apply: (1) the transactions must all be arms- length wit no identify of interest between buyer and seller or other parties to the transaction; (2) if the price is increasing 20% or more (i.e., seller buys at $100,000 and, within 90 days contracts to sell at $120,000 or more) then the lender must justify the increased value by maintaining a 2nd appraisal or other evidence of renovations, repairs, etc. and order a property inspection. The inspection does not need to be FHA approved, but can have no interest in the property or relationship with the seller. The inspector must be hired, and paid, by the lender, although the lender can pass the expense along to the buyer. This waiver does not apply to reverse mortgages.
To view a copy of the official letter with the Federal Housing Administration lifting the FHA 90 Day seasoning rule for one year please click here.
To read the Press Release about the Waiver online at the Official HUD and FHA 90 Day Flip Rule Waiver Announcement click here.
Some information from:
theprivatemarket.com
ilovesuwanee.blogspot.com
