Frederick County Short Sale Blog | Homes for Sale in Frederick Md

FHA Extends Waiver to Anti-Flipping Rules

While we were all focused on what Santa would bring us at the end of last week, FHA decided to extend the waiver of the anti-flipping rules for one more year. "In an effort to continue stabilizing home values and improve conditions in communities experiencing high foreclosure activity, Acting FHA Commissioner Carol Galante will extend FHA's temporary waiver of the anti-flipping regulations."

The History

 In May 2003, in an effort to crack down on predatory lending, FHA came out with Anti-Flipping Rules. One of the major features of the rules was that any re-sale occurring under 90 days from the time the homeowner first bought the home would not be eligible for an FHA insured loan. FHA's analysis showed that among the most egregious examples of predatory lending were "flips" that occurred within a very brief time span, often within days. This way, the "quick flips" would be eliminated.

In January 2010, FHA temporarily waived these regulations, with certain exceptions. They extended it until the end of 2011, and now they've extended it until the end of 2012. 

From the FHA website: "This action will permit buyers to continue to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. It will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities."

Anti-Flipping Rules Still Maintained:

 The Waiver continues to be limited to sales meeting the following 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 and documents the justification for the increase in value.
  
• The Waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.

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The Highland Group