WASHINGTON – Dec. 4, 2012 – The Federal Housing Authority (FHA) has a rule that forbids “flipping” – executing a new sales contract for a home with an FHA-insured mortgage in 90 days or less.
However, FHA has waived that rule and allowed flipping since January 2010 as a way to boost sales during the housing slowdown. Since that time, the rule has been extended three times, including the most recent announcement yesterday.
By waiving the flipping rule, FHA hopes to encourage investors that specialize in acquiring and renovating properties. If investors upgrade the housing stock, FHA says, it will make more livable homes available for first-time buyers and others.
The waiver applies to all single-family properties being resold within the 90-day period after prior acquisition – it’s not limited to foreclosed properties. However, the waiver is subject to certain conditions, and mortgages must meet these conditions to be eligible for the waiver. The waiver isn’t applicable to mortgages insured under HUD’s Home Equity Conversion Mortgage (HECM) Program.
The Department of Housing and Urban Development announced the extension in the Federal Register, which is posted online.
© 2012 Florida Realtors®