Changing times, changing rules……..HUD temporary flipping requirements rule waived.
HUD announced a temporary waiver of the 90 day flipping requirements rule. The waiver is effective for FHA purchases with contracts signed on or after February 1, 2010. Purchase contracts signed before February 1, 2010 are not eligible for the waiver.
The waiver is limited to sales meeting the following general conditions which are designed to protect FHA borrowers against “flippers” where properties are quickly resold at inflated prices to unsuspecting borrowers.
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
- LLS’s Corporations and trusts must be established in accordance with state and federal law
- No evidence of previouse flipping within 12 months
- Evidence that property was marketed openly; via MLS, Auction, FSBO
If 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 the following conditions:
- Significant work has been done to the home {documented by a second appraisal verifying repair and rehabilitation have been completed to substantiate an increase more than 20 percent}
- In cases where no work has been done, the appraiser must provide explanation to support the increase since the prior transfer.
- 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 the inspection. at a minimum, the inspection MUST include:
- Property structure, foundation, floor, ceiling, walls and roof
- Exterior, siding, doors, windows, any decks, balconies, walkways and driveways
- Roofing, plumbing, all electrical, heating and A/C systems
- All interiors
- All insulation/ventilation systems as well as fire places and fuel burning appliances.
- The waiver does not apply to the Home Equity Conversion Mortgage {HECM} for purchase program.
The waiver is scheduled to be effective for one year, unless otherwise extended or withdrawn by HUD. If HUD discovers that there is a significant increase in mortgage defaults and claims attributable to the waiver, HUD may withdraw the waiver immediately.
The following exceptions to the 90 day flipping guidelines are still applicable and ramin unchanged from previous guidelines:
- Re-sales by employers to employees
- Builders selling a newly built home
- Sales by HUD of Real Estate Owned {REO}
- Inherited property
- Real Estate sales owned by Federal Agencies
- State and Federally chartered financial institutions and government sponsored enterprises {GSE – e.g. Freddie Mac, Fannie Mae, Bank foreclosures}
- Non-profit organizations approved to purchase HUD REO single family properties at a discount with resale restrictions http://www.Lhud.gov/offices/hsg/sfh/np/np_hoc.cfm
- Local and state government agencies and the instrumentalities of local governments approved by HUD to provide secondary financing. http://www.hud.gov/offices/hsg/sfh/np/np_hoc.cfm
- Presidential declared disaster areas {must be sold in the time frame the exception will be in effect and in the specific disaster areas} www.fema.gov/news/disasters/fema
- Lenders that have taken properties back in foreclosure
- Sales of previously foreclosed abandoned properties and sold by “for-profit” & “not-for-profit” entities using funding with state & local government agencies under the NSP program.
The complete text of the Waiver is available on the HUD website at: http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf
Until next time……………
Blessings,
Tonya & Tifni
visit our website at www.boisehomes4u.com or contact us for any real estate needs or questions Tonya 208-860-1598 or Tifni 208-861-8295
