FHA 90 Day Flip Exemption for Investors
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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.
Click Here to read the press release
Click Here to read the full waiver
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.
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January 16, 2010 at 10:23 am
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.
January 16, 2010 at 10:27 am
Awww.. thanks, Kelly!
January 16, 2010 at 10:35 am
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.
January 16, 2010 at 10:44 am
Well said, Donna. I agree.
January 16, 2010 at 12:15 pm
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
January 16, 2010 at 3:10 pm
About time they came to their senses. Also, I want to say that you are One Super Hot Tamale !!!
January 16, 2010 at 7:38 pm
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.
January 16, 2010 at 10:50 pm
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?
January 16, 2010 at 10:54 pm
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.
January 17, 2010 at 3:24 pm
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.
January 17, 2010 at 5:12 pm
I really appreciate the valuble updated info you send out.
Thanx!
January 18, 2010 at 11:55 am
Wow this is GREAT!
Thanks for the post.
Mari
January 18, 2010 at 11:57 am
Well it’s about time don’t ya think?
This should be good news for ALL Flippers etc.
Hope it sticks FOR EVER!!!
Marty
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February 18, 2010 at 6:49 pm
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.
March 5, 2010 at 8:13 pm
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??
March 5, 2010 at 8:20 pm
oh…I neglected to say it is a conventional loan…
Cheryl
March 6, 2010 at 9:51 am
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.