FHA 90-Day “Anti-Flipping” Rule Waived - Yes and No
January 29, 2010 by Danilo Bogdanovic
Filed under Lending/Mortgages, Real Estate Investing
Many of you have gotten excited about the FHA “waiving” their 90-day “Anti-Flipping” rule beginning February 1, 2010. But hold on a second because that’s not what really happened.
In case you don’t know, the FHA “Anti-Flipping” rule prevents you - the ready, willing, able and honest home buyer - from buying a perfectly good and renovated home that was last bought within the last 90 days (bank-owned properties do not fall into this category). It has also prevented investors who have bought, renovated and flipped a property within the last 90 days from being able to sell it to home buyers that are using FHA financing.
Sounds a lot like a “lose-lose” situation, doesn’t it? That’s because it is.
Well, the FHA has realized that it’s hurting home buyers and has made some changes to their “Anti-Flipping” rule. No - they have not canceled, repealed, gotten rid of or any such permanent thing when it comes to the rule. They have simply made some temporary small changes to the rule which allow for a small window of breathing room. But it’s ain’t much of a window.
Here are the highlights of the changes to the FHA “Anti-Flipping” rule…
The exception to the FHA 90-day “Anti-Flipping” rule is only for properties that do not have a 12 month history of flipping. The properties must have all the renovation and rehab closely documented. And the increase in sales price must be less than 20 in order for the property to qualify. If the sales price is 20 percent or more, a full home inspection and 2nd appraisal must be conducted.
And here’s the kicker…
Banks and financial institutions must adopt this exception before you, the home buyer or investor, can take advantage of it. So far, I have yet to hear of any bank or financial institution adopting it. And even if they do, they may add their own extra rules to the exception on top of the FHA’s so who knows what the final “exception” to the rule will be - if there’s one at all.
Sorry to burst your bubble folks, but better you know the real truth now rather than finding it out the hard way later.
If you have specific questions or concerns as a home buyer or investor, email or call me - 703.582.6900.
You can also read the HUD announcement and get further details regarding the changes by checking out the document below (click here if you don’t see the HUD press release regarding changes to the FHA 90-day “Anti-Flipping” rule below)…
Changes to FHA 90-day Anti-Flipping Rule 2010 -
Great article, and actually true. We wanted to buy a home but the loan was not approved by the underwriter because of the 90 day rule and I did not qualify for the 90 day waiver the lender was not willing to waive the 90 day rule they kept looking for reasons as to why to decline the loan it seems to me that they do not want to apply that waiver like this article says.
Thanks Fernando. Sorry to hear about what happened in your situation. You witnessed first-hand how, even though the FHA “relaxed” the rule, it’s still very “tight.”