The Federal Housing Administration (FHA) is extending its temporary waiver of the “anti-flipping” regulation until December 2014, the agency announced last week. The waiver includes a provision noting it is not applicable to reverse mortgages insured under the Department of Housing and Urban Development (HUD).
FHA’s temporary waiver concerns past regulation that prohibited the use of FHA financing to purchase single-family homes that were being resold within 90 days of the previous acquisition.
Often referred to as “property flipping,” where a recently acquired property is resold for a profit with an artificially inflated value, FHA believes the waiver aims to keep families in their homes, while also improving communities
The recent downturn in the housing market led to a rapid rise in defaulting mortgages, and consequently, an increase in foreclosed homes, FHA notes. Since the waiver has been made available, HUD believes that it has made a significant contribution to neighborhood stabilization.
“Not only do foreclosures affect the families that lost their homes, but they affect neighborhoods and communities,” FHA states.
To qualify for the waiver, properties must meet the following criteria: 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% or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions; and only forward mortgages are eligible. Mortgages insured under HUD’s HECM program are ineligible for the waiver.
Written by Jason OlivaPrint Article