FHA Loan Changes for Flip Properties

In the boom-time market of the early 2000's the market was so strong that people could buy a home and sell it again 30 days later and make a profit. This is called “flipping” and it lead to a great deal of mortgage fraud. In order to prevent that, FHA put in a restriction that said a home was ineligible for an FHA loan if the property had sold within 90 days of the current sale. Then, with the market crash, FHA changed the rules to allow sales within 90 days in order to spur the market along.

In case you hadn’t heard - FHA announced that the temporary flip waiver 24 CRF 203.37a(b)(2) which allowed FHA property flips within 90 days of the previous seller’s acquisition, will expire with sales contracts dated after December 31, 2014.

FHA deems a sales contract to be executed when all parties to the contract have signed the contract, and the contract is enforceable under state law.

Mortgages that are made on properties in which sales contracts have been executed after 11:59 PM, December 31, 2014, are not eligible for the waiver.

Sales contracts executed after December 31, 2014, will prohibit the use of FHA financing to purchase a single family property that is being resold within 90 days of the previous seller's acquisition.  FHA defines the seller's date of acquisition as the date of settlement on the seller's purchase of that property.

There are other options – talk to your agent and your loan officer if you are considering buying a home that was sold less than 90 days ago.

This post courtesy of:

Chris Washburn
Area Manager
Washington DC and Maryland

1327 14th St NW #101
Washington, DC 20005

Office: 240-297-3820
Direct:  202-643-FUND (3863)
Efax:     855-232-7807

chris.washburn@caliberhomeloans.com

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