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Monday, January 25, 2010

HUD 90 Day FHA flip rule waived! Effective Feb 1st!

The FHA commissioner recently explained that the challenges facing many homebuyers using FHA loans has been the lack of housing inventory available to FHA buyers. Waiving the 90 day FHA flip rule for one year will hopefully provide additional inventory for FHA buyers and help the market remain stable. Currently, FHA prohibited insuring a mortgage on a home that was owned by a seller for less than 90 days. This forced investors and developers to hold title for at elast three months prior to re-listing the home they had purchased. As of February 1st, FHA buyers may purchase a home resold by investors/developers who have held title less than 90 days. This will provide additional inventory for FHA buyers. In addition, this will drive invesotrs/developers to purchase and flip more homes during this year of the 90 day flip rule moratorium.

From the HUD website:

" In today's market, FHA research finds that acquiring, rehabilitating, and the reselling of these properties to prospective homeowners often takes less than 90 days. Prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition adversely impacts the willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-day period of time."

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