FHA Extends Waiver Of Anti-Flipping Regulations

FHA Extends Waiver of Anti-Flipping Regulations

On February 1, 2010, FHA temporarily waived its rules that prohibited insuring a mortgage on a home owned by the seller for less than 90 days. That waiver was set to expire on December 31, 2011. However, on December 28, 2011 FHA announced an extension of this temporary waiver through the end of 2012, which is limited to sales meeting the following 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 only applies if the lender meets specific conditions, and documents the justification for the increase in value; and

• The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.