The Federal Housing Administration is extending its 90-day â€œanti-flippingâ€ waiver through 2014â€”which could bode well for single-family investors, rehabbers, and buyers seeking low down payment financing, Inman News reports.
The waiver allows buyers to purchase homes that have already been sold in less than 90 days.
The purpose of the two-year extension to the waiver is to increase â€œthe availability of affordable homes for first-time and other purchasers, helping stabilize real estate prizes as well as neighborhoods and communities where foreclosure activity has been high,â€ says Carol J. Galante, acting FHA commissioner about the extension.
In 2003, FHA issued an anti-flipping waiver to stop a high number of home flipping, which was being blamed on inflating home values. The FHA rule prevented FHA-backed loans from being used to purchase homes that had been owned by a seller for less than 90 days. In 2010, the U.S. Department of Housing and Urban Development decided to reconsider that 90-day limit when foreclosures started to cause blight in neighborhoods and put downward pressure on property values.
The latest two-year extension to the waiver includes several requirements, such as the property canâ€™t have a pattern of previous flips during the 12 months before the transaction. Also, if the property being resold is more than 20 percent higher than what the seller paid for it, the seller must produce documentation showing renovations and repairs made to justify the sales price. Inspections are required when price jumps are higher than 20 percent too.
â€œThis definitely benefits my
investors, but itâ€™s also good for communitiesâ€ where there are high rates of
abandoned, deteriorating foreclosures, Kevin Kim, an agent with Windermere Preferred
Living in Brea, Calif., told Inman News.
Source: â€œFHA Says Flip Away -- Within Limits,â€ Inman News (Dec. 3, 2012)
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