Great news for investors! HUD is lifting the 90 day resell "no flipping" restrictions.
Surprising move by HUD ~ U.S. Department of Housing and Urban Development on Friday.
For those of you familiar with the restriction on flipping real estate in less than 90 days, this may be welcome news for you. With certain restrictions, FHA currently prohibits the insurance of a mortgage on a home owned by the current seller for less than 90 days..well that is changing as of February, 1 2010 according to HUD's website. An announcement put out on Friday January 15th, 2010 by HUD may indicate just how dire the foreclosure situation going forward may really be. In addition to the temporary lift of the 90 day restriction in many purchases, Secretary Donovan announce $2 billion in Neighborhood Stabilization Program Grants to communities in an effort to assist with the fight against the effect of vacant and abandoned properties.
"FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties," said FHA Commissioner David H. Stevens. "This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity."
The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of "flipping" where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general conditions:
This is very interesting news indeed. So if you are a property investor who has been scarred away from buying distressed properties because of the 90 day resale restriction, may be time to be looking at property again. Read the Full HUD announcement here
- All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
- In cases in which the sales price of the property is 20 percent or more above the seller's acquisition cost, the waiver will only apply if the lender meets specific conditions.
- The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.