FHA Flipping Waiver Extended to December 31, 2011
HUD has recognized the value of investors and their ability to facilitate faster re-sales and rehabilitation of foreclosed properties. Also, that the practice of “flipping” a property (purchase and re-sale happen within a 90-day time frame) is not always a bad thing. In an effort to get investors (and their money) back in the game FHA has extended the waiver on its 90-day flipping policy to December 31, 2011.
The following conditions apply in order for a “flipped”
home to qualify for FHA insured financing:
- All transactions must be arms-length with no inappropriate agreements
- Seller must hold title
- No previous flipping activity on the property
- Property must have been marketed openly and fairly via MLS, etc
- When sales price exceeds sellers acquisition cost by more than 20%:
- Value increase must be documented through rehab costs or explanation by appraiser.
- Lender must order a property inspection report and provide to buyer prior to closing. Inspection must cover:
- Structure – foundation, floor, ceiling, walls, roof
- Exterior – siding, doors, windows, walkways, driveways
- Plumbing, electrical, heating and air conditioning systems
- Insulation and ventilation
- Fireplaces and solid fuel-burning appliances
Great News for Investors in 2011!