The Federal Housing Administration (FHA) announced the temporary waiver of the “anti-flipping” rule has been extended through December 31, 2011. In my opinion the “anti-flipping” rule was a bad idea to start with and in the current housing market the last thing we need is anything to discourage investors from buying homes so this is a good move by FHA.
The Anti-Flipping Rule…
With certain exceptions, FHA regulations prohibit insuring a mortgage on a home owned by the seller for less than 90 days.
The Waiver of the Rule has Rules (what else did you expect?)…
From FHA…
To protect FHA borrowers against predatory practices of “flipping” where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver continues to be limited to those sales meeting the following general conditions:
- All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
- In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions.
I have never liked the anti-flipping rule, nor do I like the restrictions FHA has on the waiver, but it beats nothing I guess. I just don’t like the idea of assuming if I’m selling a house to a relative that there must be fraud or conspiracy involved, or if I’m selling the house for more than 20 percent above what I paid for it that must be fraud (I guess they don’t want you making any improvements to the property?)
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