They are doing this because of a lot of fraud that took place. People were buying and flipping right away at inflated prices.
January 29, 2011, FHA formally announced the suspension of their 90 day Flip Rule to December 31, 2011, so this long standing FHA flip rule has been officially extended by FHA for another year.
The thing to remember is that not all lenders will also waive their flip rules; if you need to find one - please contact me.
This flip rule waiver is limited to sales of the homes meeting the following conditions:
~no identity of interest between the Buyer and Seller.
~Seller holds title to the property.
~property was marketed openly on MLS, auction, for sale by owner etc. Any contracts that refer to an "assignment of contract sale" maybe a red flag.
~no pattern of previous flipping evidenced by multiple title transfers within 12-month period.
There are also special reguirements for cases in which the sales price of the property is 20% or more above the Seller's purchase cost; it has to be justified by supporting documents or a second appraisal. There's more to know - please email me if you need more information.
*list of improvements
*specifications of improvements
Any dramatic increase in sale price from a previous sales price will be highly scrutinized. The best way to ensure that no delays happen or difficulties arise is to see that this dramatic increase is justified inside the appraisal report.
Good luck Squareone!
You need to work with a mortgage broker who has many lenders to choose from so they can find one with no flip rule. I have successfully closed purchases involving 90 flips with more than 20% profit. Let me know if you need my help.
To Your Success,
My experience is not on how much "profit" the seller has but the timeline. Most new buyer lenders will not lend on a house that is being sold less than 90 days from close of escrow. Those who do, seem to charge a slightly higher interest rate. It reduces the pool of buyers. If you can hold to 91 days, all should be good and you do not risk a new buyer's loan issues.
The FHA rule prohibiting seller to sell a home bought at foreclosure for 90 days (anti-flipping) has been suspended for the year since 02/01/10 and it should last till at least the end of 2010. Otherwise, I am not aware of other restrictions on when a seller can sell their investment properties. .
Here is a link to the news article .. http://www.washingtonpost.com/wp-dyn/content/article/2010/01