Really…No surprise here.
In an effort to stimulate sales and reduce housing inventory…the HUD extended it’s “lift” of the ban on “Flipping”…the process of purchasing a home, fixing it up and selling it on the open market…sounds sill but yes…the Government had a rule against that…like the government needs to regulate anything else in our lives.
So hear ya go…the announcement:
The Federal Housing Administration is extending its waiver of a rule that prohibits the agency from insuring homes sold within 90 days of their acquisition.
The anti-flipping regulation was designed to prevent activity that harms neighborhoods by allowing buyers to acquire property and then quickly sell them at inflated prices.
While the law was created to maintain stability in the housing market, the FHA temporarily waived the rule back in 2010, saying a reprieve would allow buyers to acquire HUD-owned properties, bank-owned properties and private homes for the purpose of improving them and selling them to revitalize neighborhoods.
The waiver is set to expire Jan. 31, but will now be in effect through Dec. 31, 2012.
“This extension is intended to accelerate the resale of foreclosed properties in neighborhoods struggling to overcome the possible effects of abandonment and blight,” said Carol Galante, acting FHA commissioner. “FHA remains a critical source of mortgage financing and stability and we must make every effort to promote recovery in every responsible way we can.”
The waiver is subject to certain restrictions and stipulates that all qualified transactions must be at arms-length, meaning parties to the deal cannot be striving to achieve some type of kick-back or special interest separate from buying and selling of the real estate.
When the sales price of the property is 20% or more above the seller’s actual acquisition cost, the waiver will only take effect if the lender meets all criteria and provides documents that justify the price increase, according to the FHA.
Furthermore, the waiver applies only to forward mortgages and is not eligible for home equity conversion mortgages.
The FHA said it extended the waiver after finding it takes less than 90 days to acquire, rehabilitate and sell a distressed property.
