We can now fund FHA Loans on properties
that have been owned less than 90 days.

Waiver of FHA Anti Flipping Policy

On January 15, 2010, HUD issued a temporary waiver to their anti property flipping regulation that prohibits issuance of FHA insurance on properties owned by the seller for 90 days or less.

This is a temporary waiver and will expire January 31, 2011 unless extended. Following are details of the waiver for properly documenting eligibility.

The waiver applies to all sales of properties which have been owned less than 90 days (counted from the date of settlement on the Seller’s acquisition of the property) that meet the following criteria:

1. Must be an arm’s length transaction with no identity of interest between Buyer, Seller or other parties participating in the sales transaction.

To make this determination the following applicable steps should be performed:

• Verify that Seller is in title as indicated on the Appraisal and no apparent family or business relationship exists between the parties to the loan or sales agreement.

• LLCs, corporations or trusts as Sellers must have been established and operated in accordance with applicable State and Federal law. Validity of Seller must documented: Business licenses, State

Department of Corporations status, and Attorney Opinions are examples of acceptable documentation.

• No pattern of previous flipping exists such as multiple transfers of title within a 12 month timeframe as indicated on the chain of title on the Appraisal .The appraisal is required to show a 3 year history of ownership.

• Document that property was marketed openly and fairly through an MLS, an auction, For Sale by Owner or developer. Note: Sales contracts which have been assigned to the current Buyer are not allowed.

2. For property sales prices that are 20% or more above the Seller’s acquisition Cost, the following must be performed: Keep in mind that if the value increases by 100% or more, a second appraisal is required:

• Appraiser must indicate the Seller completed legitimate renovation, repair and rehabilitation work on the subject property to substantiate the increase in value.

• If the work was not performed, Appraiser must provide appropriate explanation of the increase in value since prior title transfer;

AND

• A property inspection report must be ordered and provided to the Buyer/Borrower prior to closing. Cost of this inspection will be charged to the Borrower. The inspector must not have any interest in the property or relationship with the Seller and may only be compensated by Borrower. The inspector may not compensate any one for the inspection referral or be compensated for making referrals or recommending contractors to perform any repairs recommended by the inspection. Property inspections must include, at a minimum, the following:

• Structure, including foundation, floor, ceiling, walls and roof;

• Exterior, including siding, doors, windows, appurtenant structures such as decks and balconies, walkways and driveways;

• Plumbing, electrical and heating and cooling systems;

• All interiors; and

• All insulation and ventilation systems, as well as fireplaces and solid-fuel burning appliances.