KEEP ON FLIPPING FOR NOW

FHA Extends Anti-Flipping Waiver through 2012, What a Surprise...

 

The Federal Housing Administration (FHA) announced in Late December they are extending a temporary waiver of their anti-flipping regulations through the end of 2012.

Back in 2010, in an effort to speed the sale of REO homes, among others, the FHA waived a rule that prohibited insuring a mortgage on a home owned by the seller for less than 90 days.  That first waiver ultimately was extended through the end of 2011.  There’s not a lot of flipping going on in Archuleta County right now and the regulations pertain to homes sold within 90 days of purchase, another Pagosa Springs area rarity, so this extension is not likely to make a big difference in our market, but it’s worth pointing out.

The waiver permits buyers to use FHA-insured financing to purchase properties including HUD-owned, bank-owned (REO), or privately held quick sales.

The extension was announced December 28, 2011, and of course it’s subject to another extension or a withdrawal at any time and has strict guidelines to prevent the “predatory” flipping (properties being resold quickly at inflated prices to “unsuspecting” borrowers)  Here are some of the basic guidelines, taken directly from the FHA website:

- 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 will apply only if the lender meets specific conditions, and documents the justification for the increase in value.

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

While this doesn’t seem to have much impact on the real estate market here in Pagosa Springs or throughout Archuleta County at this point in time, as home sales heat up over the next year it could begin to factor in.  If you want more information on this, feel free to call or write us and we’ll be happy to give you our thoughts.  You can also go directly to the FHA website to read up on it, and that might be great late night reading – better than a sleeping pill.  Follow this link to read the details of the December 28 announcement straight form the horse's mouth:  FHA says Keep on Flippin'

  

 - Joe LaMastra, January 10, 2012