Tuesday, April 6, 2010
4/06/2010 12:13:00 PM | Posted by
Arbor Mortgage
Effective February 1, 2010, HUD has suspended the rule that prevented a buyer from obtaining FHA financing on a home which had been owned by a seller for less than 90 days. This guideline was commonly called “the anti-flip rule”. This suspension of the rule or “flipping waiver” is valid for 12 months and is a boon for real estate investors because they can now turn their flips much more quickly by opening up the huge pool of FHA buyers.
Now, this may seem like old news – it’s April already, and this has been out for 2 months. Yet, the lending canvas has been strangely silent on it. Many lenders just aren’t allowing it. They are refusing to honor the flip waivers, because they see the limited time the seller owns the home as a large risk, and possibly an easy area for fraud.
Yet there are a vast number of investors scooping up properties at fire sale, and turning them quickly into habitable homes. These properties are well worth the increased cost. Now, there are stipulations to the flip waiver. Guidelines include:
- If the sales price is more than 20% over what the seller paid for the property, the seller will have to show proof of the improvements made to the home to justify the higher price.
- The home sale must be at arm's length, which means there can be no close relationship between the buyer and seller
- There can be no pattern of flipping in the previous 12 months, which is evidenced by numerous title changes.
- The Home Equity Conversion Mortgage for Purchase program is excluded from the waiver. This program is for senior citizens to use a Reverse Mortgage to purchase a home.
- The 90-day time period might may vary, depending on when the previous sale was recorded and when the purchase contract is signed.
The good news? Arbor Mortgage is able to fund these loans. So, if you are an investor in need of a financing source, or a buyer looking to purchase the home of your dreams, Contact Us today for more information.
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- Arbor Mortgage
- Arbor Mortgage is a Michigan based mortgage lender that has been providing mortgage solutions for more than a decade. Since 1998, Arbor Mortgage has helped more than 20,000 people purchase or refinance their homes. Arbor offers a variety of mortgage programs including FHA, USDA Rural Development, VA, Conventional and Alternative loans.
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