FHA will keep funding flips

Positive news, FHA home buyers will continue to have the opportunity to buy flipped properties.  Flipped properties are healthy for the real estate market as quality flips help bring up home values.  Flipped properties are homes purchased with the intention of reselling it in a short period of time, often fixing up what’s needed to get it to move in condition or better.  Flipped homes are revitalized and sell for more than in fixer upper condition, raising home values and the condition of the neighborhood.  While your first impression may be that this is great for existing home owners and investors, but it also benefits FHA buyers.  These flipped homes give FHA home buyers the opportunity to purchase move in condition houses, when they don’t have the reserves or resources to fix up a home themselves.  Buyer taking FHA financing, often allocate a good portion of their savings towards their down payment and don’t necessarily have a budget to rehab a home.  Therefore, as long as they are able to buy flipped homes with FHA financing, they are able to buy a home and have it in move in condition.          -Steven December 30, 2011

 

 

FHA will keep funding flips Waiver for 90-day resales extended through 2012 By Inman News Inman News® For the second year in a row, the Federal Housing Administration is extending a temporary waiver of its "anti-flipping" rule, meaning homebuyers relying on FHA-insured financing will continue to be able to buy homes that have changed hands in the last 90 days. The waiver is a boon for investors seeking to rehab and flip properties, because it expands the pool of eligible borrowers to include those relying on FHA-backed loans, popular with first-time homebuyers and others who lack the cash to make large down payments. In extending the waiver through 2012, FHA said all transactions must continue to be arms-length. In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will apply only if the lender can document the justification for the increase in value, FHA said. FHA instituted the anti-flipping rule in 2003 to protect its mutual mortgage insurance program from losses on homes that were merely flipped, rather than rehabbed. Homes repossessed by Fannie Mae, Freddie Mac, and state- and federally chartered financial institutions were exempt from the rule. In February 2010, the Obama administration waived the waiting period for resales -- including homes purchased and rehabbed by private investors -- in the hopes of stabilizing home prices and revitalizing communities hit by foreclosures. It often takes less than 90 days to acquire, rehabilitate and sell properties, the Department of Housing and Urban Development said at the time. Some sellers of rehabbed properties had been reluctant to enter into contracts with FHA buyers because of the cost of holding a property for 90 days, HUD said. In extending the waiver through 2011, FHA said it insured 21,000 90-day property flip loans worth more than $3.6 billion in 2010 that would otherwise not have qualified for financing. That number has since grown to nearly 42,000 mortgages worth more than $7 billion on properties resold within 90 days of acquisition.

 

 

SUNIL SETHI REAL ESTATE REALTOR, Broker, President, MBA Fremont Real Estate

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