The Department of Housing & Urban Development (HUD) announced Friday January 28th it will extend the suspension of their rule that prevents FHA from insuring a home loan that’s being used to purchase a home that’s been owned than 90 days by the seller. The extension is good until January 1, 2012. This rule was originally put in place to prevent investors or ‘flippers’ from using straw (fake) buyers and crooked appraisers to defraud the government.
The waiver has been extended to December 31, 2011. 
FHA Commissioner David Stevens said, “Today I can report that this policy change has been effective. Since the original waiver went into effect on last February, FHA has insured more than 21,000 mortgages worth over $3.6 billion on properties resold within 90 days of acquisition.”
—— BREAKING NEWS —– 12/23/2011 — HUD just announced the 90 day flip waiver has been extended through 2012. Read details (click that link) about why this is a BIG HAIRY DEAL and see if guidelines have changed.
________________________________________________________
This will benefit the local Inland Empire housing market where investors are buying up bank owned homes, doing some renovation, and then re-selling them to real home buyers who are using FHA financing. With 65% of home buyers using FHA loans in the Inland Empire, this will continue to encourage investors to purchase, renovate, and re-sell these homes, get them in better condition, and make them eligible for traditional FHA financing.
Prior to this 90 day waiver, investors had to wait until the 91st day before they could accept an offer from a buyer using FHA financing. This 90 day anti-flip extension will keep the turn times quick and get more properties into the market’s inventory.
You can read about the additional 90 day flip waiver requirements here. Here is the original FHA flip blog post you may want to read HUD allows FHA loans on investor flip properties.
It’s important to know that not all lenders offer FHA ‘flip’ financing and even fewer are experienced at originating these types of loans.
If you would like to inquire about purchasing a newly renovated home that is being flipped with an FHA loan, email me brad(at)homeloanartist(dot)com or call direct (951) 215-6119.
Qualify for Special FHA ‘Flip’ Financing
Thanks for posting this article. Question, do you find that lenders place appreciation caps on the resale price when dealing with flips? I’m just curious to see if that’s an actual restriction that a lot of lenders have. I just posted a video on the FHA 90 day flip rule on my website and we discussed lender overlays – that’s why I asked the question.
Julius, some lenders do place appreciation caps but I have access to several lenders who are OK with large appreciation if it makes sense and can document the reason for it.
The whole 20% thing is a joke in my opinion. It’s not even worth flipping if you can make at least 20% mark-up.
Brad, thanks for the reply. I appreciate it! Yeah, the appreciation caps make no sense – sooo grateful for good lenders and experienced underwriters that know better. Definitely trying to keep my “ear to the streets” on what lenders are doing out there so thanks again. Have you head that lenders like Prospect and Wells Fargo are dropping minimum FICO requirements down to 580 and maybe even 540?! The pricing hits are probably brutal.
Yes, I have heard about Wells lowering FICO score. Anything under 580 requires minimum 10% down payment and a manual underwrite which caps DTI to 43%. I tried replying to you Twitter message but I cannot send a message if you are not following me:-)