The Federal Housing Administration (FHA) is extending foranother year its temporary waiver of anti-flipping regulations, initiallyintroduced in 2010 thru 2012 in order to facilitate the turnaround offoreclosed properties in hard hit communities.
“This extension is intended to accelerate the resale offoreclosed properties in neighborhoods struggling to overcome the possibleeffects of abandonment and blight,” said Acting FHA Commissioner Carol J.Galante.Â “FHA remains a critical sourceof mortgage financing and stability and we must make every effort to promoterecovery in every responsible way we can.”
This newly extended waiver contains strict conditions andguidelines to prevent “predatory” property flipping – when properties arequickly resold at inflated prices to unsuspecting borrowers however so far thewaiver has created a great stimulus to housing sales as many investors takemoney out of the Stock Market roller Coaster to purchase reo and short sale propertiesto resell and re-coup investment portfolio losses. Â Many mortgage lenders are pledging to increasethe number of short sales they approve in 2012 – Bank of America has stated itwill increase its short sales by 60 to 70% this year. With interest ratesremaining low and first time home buyers being able to afford to purchase againthe timing of the FHA 90 day flip waiver extension couldn’t be better!
Since the waiver first went into effect on Feb. 1, 2010, theFHA has insured nearly 42,000 mortgages worth more than $7 billion onproperties resold within 90 days of acquisition, providing neighborhoods withfresh pride of ownership to replace the blight of empty, neglected homes.
FHA research has found that flipping these properties toprospective homeowners often takes less than 90 days.Â Without the waiver, sellers must considerholding costs, the risk of depreciation as well as the risk of vandalismassociated with allowing a property to sit vacant over a 90-day period whilewaiting to be re-sold.
Contact me for a list of conditions that apply to this waiver.