FHA 90 Day Flip Exemption for Investors
16. Jan, 2010 
22 Comments
Calling all flippers! Get the party started because the FHA has finally come to their senses. Yesterday, investors were granted an exemption to the 90 day seller seasoning rule. Otherwise known as the anti-flip rule. They determined that properties take less than 90 days to rehab and making buyers wait increases holding costs thus making the properties less affordable and increasing the chance of vandalism due to vacancy.
The waiver goes into effect February 1, 2010 and will last for one year through February 1, 2011.
There are a couple of caveats:
1. All transactions must be arms length so no selling properties to your Mom.
2. If you’re selling for more than 20% of your acquisition cost, you must justify the value by providing documentation of your repairs and/or a second appraisal.
I think this is fantastic news! Tell me what you think – leave a comment below.
And be sure to spread the word. Just open the Share/Save button below to post to Facebook, Twitter or bookmark.
This is life changing news. Susan the word guru really lowers your value. You are the best resource I have found for real estate information and education in 5 years. And its no surprise you were the first person to email me about this.
Awww.. thanks, Kelly!
I do think that waving the 90 day seasoning rule for resales is necessary for FHA, given the enormous glut of homes that need to be sold any way possible.
Today investors are responsible for about 30% of all home sales activity, so FHA can’t afford to ignore this key sales outlet.
But that being said, I would strongly encourage my fellow investors to stick to the highest level of professional ethics and responsibility. After all, the brunt of the sub-prime meltdown losses went to private investors. If FHA tanks due to fraud and manipulation of the transactions, it will be the united states taxpayer that will be on the hook this time. We must all resell properties with honest numbers and accurate values. This will encourage the ethics and standards that will keep our housing market stable, healthy and strong. This is our opportunity to help the housing market recover, and show that real estate investors play a vital role, (for better or for worse), in today’s real estate market.
Well said, Donna. I agree.
Hi Susan – I thought this was a hoax when I first saw it. A concocted pdf version of a similar “rule change” has been emailed around several times the past 6 months and it turned out to be a hoax each time. Reading the link to actual HUD website, hopefully this is one! Thanks. -Paul
About time they came to their senses. Also, I want to say that you are One Super Hot Tamale !!!
Great news. This is a big incentive for investors who are concerned about the extra holding costs and expenses related to waiting the 90 days. This will help the economy out in 2010! Because as we sell properties, the trickle down effect is a value for everyone involved in the transaction.
I got this quote straight out of the new FHA ruling
“If 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 certain requirements.”
Susan who is the lender and what are the requirements? I ask because its not saying is the seller meets certain requirements but instead talking about a lender. So if this talking about the buyers lender or assuming the seller is a bank selling an REO?
Nevermind, I took some time to read the actual waiver and got my answer. Nice move by the FHA.
2010 is looking like a great year for investors and also Realtors who are out their negotiating short sales now that Treasury just came out with new rules to streamline the process.
Susan, FHA’s decisions are typical. The government is REACTING to the costs that the 90 day seasoning definitely increased for anyone rehabing a property and attempting to sell it. Everyone is an investor when it comes to a property. I do not know of anyone who intentionally buys a property to lose money on it! Restricting commerce is all the 90 days seasoning did.
I really appreciate the valuble updated info you send out.
Thanx!
Wow this is GREAT!
Thanks for the post.
Mari
Well it’s about time don’t ya think?
This should be good news for ALL Flippers etc.
Hope it sticks FOR EVER!!!
Marty
Better Returns Than Bank CD’S!™
TheCashProvidedDOTcom
I was excited when I heard the news as well. The only problem is banks are not required to make loans under the new ruling. I recently called Bank of America and Wells Fargo and they both told me that the 90 day seasoning was still in play. If anyone knows of a lender that is making FHA loans based upon the waiver, I would love to hear from you.
I am currently trying to purchase a flip with wells Fargo. They are dragging their heels. It has been 97 days since the flipper purchased the property. My credit is excellent. I wonder how long I should wait for an answer. We are putting 40% down on the property but the seller is asking above market price, and over 20% of his purchase price. We have a stipulation that says we can back out if the appraisal proves this, and the seller wont drop the price to appraised value. What is the risk for the bank??
Wells is afraid of rapid appreciation. If the seller seasoning is short, they don’t (want to) believe that the value/price could increase that quickly.
oh…I neglected to say it is a conventional loan…
Cheryl
You certainly deserve a round of applause for your post and more specifically, your blog in general. Very high quality material!
i was wondering if you have any insight on my current situation. we signed a contract with a seller on a home that apparently he owned for less than ninety days but we were not aware that it would be a problem. our lender has gone through two different loan places, im assuming banks, and they both said we have to wait out the 90 days. we tried to get seller to sign addendum to push back date which is about two weeks after contracted closing date but he refused and insisted we pay him $100 a day to hold it. we do not want to do that. he has been uncooperative from the beginning and i think he is going to far with this. what should have we done differently? is it our fault for not seeing how long he owned property, or his for signing with buyer thats using fha loan? with this new waive, its all a bit confusing to me. also, he was asked to pay for second appraisal that was needed and he refused, we wrote out the check but our lendor later told us it is common practice for seller to pay for second, not buyer. what do we do in that situation? thanks for any information and help you can give!
I’m afraid I’m siding with the seller on this one. If you can’t get a loan approval you are in violation of the contract. In the past when I’ve done loans the lender paid for a second appraisal if one was required.
Does a flip rule apply to conventional loans where the seller (corporation) is losing money on the sale? Both my realtor and broker cannot tell me.
Thanks
A conventional loan isn’t technically an FHA loan but they usually do have seasoning rules as well. Profit or loss on the seller side have no impact on whether there is a seasoning requirement or not.