FHA Mortgages and Property Flips

The guidelines for FHA home loans and property flips have recently changed. The date HUD uses is the Settlement Date on the seller’s HUD-1. Starting in January, to avoid the 90-day rule, a buyer has to apply for the loan on the 91^st day from the HUD-1 Settlement Date. Also, buyers should note that conventional loans have no such restrictions.

Property Flips Resold within 90 days are No Longer Eligible.

Today, FHA Office announced the temporary waiver of FHA’s regulation. It prohibits FHA financing from purchasing single-family properties resold within 90 days of the previous acquisition expiring on December 31, 2014. This affects how FHA home loans and property flips.

The waiver applies to all sales contracts FULLY executed.

FHA deems a sales contract to be executed when all parties to the agreement have signed the contract. Furthermore, the contract is enforceable under the law of the state the property is located. Mortgages made on properties in which sales contracts have been executed after 11:59 PM, December 31, 2014, are not eligible for a waiver of the regulation prohibiting property flipping. FHA will not extend the release beyond December 31, 2014.

FHA lists the sales transactions exempt from this rule

Exempt transactions include:

• HUD REO,
• Sales by other federal agencies of REO properties,
• Sales of properties by nonprofit organizations (approved to purchase and resell HUD REO properties),
• Sales by state- and federally-chartered financial institutions and government-sponsored enterprises (GSEs), and,
• Upon the announcement by HUD through the issuance of a notice, sales of properties in areas designated by the President as federal disaster areas.

Email me if you have any questions or want to discuss your FHA financing options. Additionally, HUD provides a more detailed FAQ about FHA mortgage regulation and property flipping.