Friday, January 29, 2010

HUD has Suspended its FHA 90-day Anti-Flipping Rule

Lenders who now own REO properties and investors on homes like this news.
 
For expansion of access to FHA mortgage insurance and to allow for the quick resale of foreclosed properties, US Dept. of Housing and Urban Development (HUD) has announced a temporary waiver of the 90-day flipping rule.
 
This waiver takes effect February 1, 2010, and lasts for one year, unless otherwise extended or withdrawn by HUD.
The waiver is limited to those sales that meet the following conditions:
1. All transactions must be arms-length, with no identity of interest between the buyer and seller or any other parties participating in the sales transaction, including:
Seller must hold title
LLCs, Corporations and trusts must be established in accordance with state and federal law
No evidence of previous flipping within 12 months
Evidence that property was marketed openly, such as via MLS, auction, FSBO
The waiver is limited to forward mortgages and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program
2. If the sales price of the property is 20% or more above the seller’s acquisition cost, the waiver will apply only if the lender meets the following conditions:
Significant work has been done to the home (documented by a second appraisal verifying that legitimate repairs and rehabilitation have been done to substantiate an increase of more than 20%); or,
In cases where no work has been done, the appraiser must provide explanation to support the increase since the prior transfer; and,
A property inspection must be provided to the buyer prior to closing. (The lender may charge the borrower for the inspection.) The inspector does not need to be FHA approved, but must have no interest in the property, must not receive compensation other than from the lender and may not be involved with the repairs recommended from inspection.
See complete text of the waiver — including what the inspection must include — on the HUD website at: http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf.
 
 

 
 
 

Posted via email from Explore OC Homes

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