The Dept. of Housing and Urban Development (HUD) announced Friday it is
instituting a one-year moratorium on the Federal Housing Administration (FHA)
90-day anti-flipping rule.
With certain exceptions, such as HUD-owned and bank-owned properties, FHA
currently prohibits insuring a mortgage on a home owned by the seller for less
than 90 days. However, beginning Feb. 1, buyers may use FHA-insured financing
to purchase properties resold through private developers and investors,
providing access to a broader array of recently foreclosed properties.
Under the temporary waiver, all transactions must be arm's-length, and most
properties will require additional documentation of improvements and
justification of the price increase. Additional documentation may include a
second appraisal and a property inspection ordered by the lender.
C.A.R. recently submitted a letter to FHA Commissioner David Stevens detailing
the challenges facing many home buyers using FHA loans, such as the lack of
housing inventory available to FHA buyers, and the need for this rule to be
revised to reflect current market conditions. The reexamination of the 90-day
anti-flipping rule was passed as an action item during C.A.R.'s board of
directors meetings in October.