Investor who bought homes, with the intention of reselling them would have to wait 90 days. Now HUD has announced a temporary waiver of the 90 Day Flipping Rule. The waiver is effective for FHA purchase transaction loans with purchase contracts signed on or after February 1, 2010.
The waiver is limited to the following conditions
- All transactions must be arms-length, with no identity of interest between the buyer and the seller, including:
- Seller must hold title
- LLC’s, Corporations and trusts must be established in accordance with state and federal law.
- No evidence of previous flipping within 12 months
- The property was marketed openly; via MLS, auction, FSBO
- If the sales price of the home is 20% or more above the seller’s purchase price, the waiver will only apply if the lender meets the following conditions:
- Major work has been done to the home (documented by a second appraisal verifying the work has been done to support an increase more than the 20%)
- Where no work was done on the home, the appraiser must provide explanation to support the increase.
- A property inspection must be provided to the buyer prior to closing. 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The waiver is scheduled to be effective for one year, unless otherwise extended or withdrawn by HUD.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 complete text of the Waiver is available on the HUD website at: http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf
If you have questions regarding purchasing Homes in Frisco, Plano, McKinney, Allen and the Surrounding Area, TEAM DECELL is your home town experts. We have extensive experience in working with Home Investors, Foreclosures, Short Sales, New Construction and every type of Real Estate transaction you can imagine. Call now 214-975-3210