Guidelines FHA: FHA Waives Anti-Flipping Rule

June 17th, 2008 by http://fhaappraiserbatonrouge.info

http://fhaappraiserbatonrouge.info/ - Guidelines FHA: FHA Waives Anti-Flipping Rule

Source: FHA Loans Expert, Carl Pruitt

In response to my post “Warning: Why HUD May Stop Your Loan From Closing“, HUD has now waived their anti-flipping rule in certain circumstances. (Just kidding about them responding to my post, but they have taken action.)

You can find all the details here.

HUD has realized that making homes ineligible for FHA financing just because the loans had been transferred to subsidiaries or the lending institutions who foreclosed didn’t fit the guidelines was causing more harm than good in an already devastated housing market. The foreclosure problem is causing enough damage without needlessly blocking legitimate lenders from selling homes with FHA financing.

Keep in mind that this does not mean open season for “house flippers” again. In HUD’s press release, they state:

With certain exceptions, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. This prohibition is intended to prevent property “flipping,” a predatory practice that strips a home of its equity before being quickly resold at an inflated price to an unsuspecting buyer. FHA’s new policy will permit the immediate sale of foreclosed properties to legitimate borrowers wishing to use FHA-insured financing.

The waiver is limited to “sales of properties acquired by mortgagees, whether sold directly by mortgagees, or by their subsidiaries or by vendors to whom they have transferred titles to properties for the purpose of effectuating sales of those properties.” In other words, this waiver does not apply to foreclosed homes that have been purchased by investors in hopes of making a profit.

This could be a real boon to smart first time homebuyers in today’s market.

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