Until last year FHA would not insure loans on homes that had been owned less than 90 days in an effort to thwart property inflation through flipping schemes. However, last year in an effort to stimulate home sales and reduce the inventory of foreclosed homes on the market HUD waived the 90 day rule, allowing real estate investors to be able to sell homes that they had owned for less than 3 months to buyers utilizing FHA insured loans with only a 3.5% down payment.
HUD has announced that they are extending this waiver through 2011. The following conditions apply to the sale of these homes:
- It must be an arms-length transaction with no identity of interest between the buyer and seller.
- The seller holds title to the property.
- There are no sales of the property or multiple transfers of title within the previous 12 months.
- The property has been marketed openly and fairly.
- If the selling price of the property is more than 20% above the purchase price the seller must provide proof of repairs, rehabilitation and renovation costs and/or a second appraisal to substantiate the increase in value.
- A property inspection is done and the report is provided to the buyer before they close on their loan.
This is great news for anyone looking to take advantage of the current marketplace and either looking to get a great deal on a home or for real estate investors looking to pick-up more properties this year.
As always, feel free to contact me with any questions you may have.
- Relaxed FHA ‘flip’ rules prove no flop (seattletimes.nwsource.com)