Good news from Washington! FHA extended a temporary waiver of the agency’s ‘anti-flipping rule. The rule prohibits a buyer from getting FHA financing if the seller has owned the home for less than 90 days. Hence, this is called the anti-flip rule, because when investors purchase a home to “fix and flip” they often have it ready to sell in less than 90 days. Early last year, FHA temporarily waived this regulation through January 31, 2011 and last month (Jan 2011) FHA extended it through the remainder of 2011.
This means buyers can continue to use FHA-insured financing to purchase HUD Homes, bank-owned properties, or properties resold through private sales through 2011. It will allow homes to resell as quickly as possible and help stabilize real estate prices while revitalizing neighborhoods. Ultimately a win win.
Because of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential homebuyers because the downpayment requirement of 3.5% is more manageable than the 10% or more needed for conventional financing.
For investors, acquiring, rehabilitating and reselling these properties to prospective buyers often takes less than 90 days. Prohibiting the use of FHA financing for the re-sale meant fewer buyers and lower profits for investors. For buyers, it meant they were hut out from buying affordable properties. Now, buyers, especially first-time buyers, have the opportunity to buy a home that has recently been rehabilitated. It will also help to move more foreclosed properties off the market and reduce the number of vacant homes.
For more specifics you can visit the FHA Press Announcement on the Anti-Flipping Waiver Extension
If you would like to invest in real estate here in the Denver / Boulder area or have questions about it please give me a call.
If you are thinking about buying a home and want to take advantage of this extension please call me too!
Leave a Reply