Taking effect on February 1, 2010 and currently effective for one year, FHA borrowers will no longer have to wait 90 days to purchase a home that was recently acquired by another buyer with intent of “flipping” the home. Initially, the “no flip rule” was implemented to protect FHA borrowers against predatory practices. Cash buyers are purchasing homes at auction and reselling at inflated prices, often to unsuspecting buyers. Many times, these homes are badly damaged, fixed up, and relisted for a profit. Until now, an FHA borrower would have to wait 90 days to purchase such a home.
The announcement is part of the Obama administration commitment to addressing foreclosures.
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.
If you are a buyer and want to know if a specific home qualifies, please contact The Aladin Group at email@example.com to do the appropriate research.