Starting February first, the current prohibition on providing FHA backed loans for properties that have been owned by the seller for less than 90 days will be waived for a year.
To protect FHA borrowers against predatory practices of “flipping” where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is 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.
∙ The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.
The full language of the Waiver of Requirements is available online.
∙ HUD Takes Action to Speed Resale of Foreclosed Properties to New Owners [HUD]