FHA Waives Anti-flipping Rule
Effective February first, FHA will insure properties that have been purchased and resold with 90 days. The prohibition was instituted in 2003 in an attempt to discourage lender fraud related to inflated mortgages accompanied by dishonest appraisals. It has had the unintended consequence of preventing FHA purchasers from buying legitimately marketed homes that have been bought by investors on the courthouse steps at a foreclosure trustee sale and, then, quickly resold.
This move will help buyers and FHA itself. Unfortunately, it does not change the policies of Fannie Mae and Freddie Mac, the two, huge government-owned entities that purchase conventional loans.
Go HERE to read details about the FHA rule change (PDF – Adobe Reader required).
To read my article about how this rule almost cost my buyers the house they loved, see “Banking World Doesn’t Always Act Rationally.”