In a move that will undoubtedly make investors stand up and cheer, the Department of Housing and Urban Development (HUD) announced today that the Federal Housing Administration is extending a temporary waiver of its "anti-flipping" rule. The waiver is a boon for investors who rely on rehabbing and selling properties in a short timeframe, and homeowners who rely on FHA-insured financing to buy.
The pool of buyers who rely on FHA dramatically increases the investors’ ability to quickly sell. FHA research finds that in today's market, it takes a real estate investor less than 90 days to acquire, rehab, and sell a property.
Before the initial waiver in February 2010, FHA did not allow potential buyers to purchase properties that had previously been purchased within the last 90 days to protect its mutual mortgage program from losses on homes that were not rehabbed but flipped at inflated prices.
The waiver is subject to certain restrictions, including that transactions must be at arms-length, meaning that the deal must be made between separate parties who would not gain from the buying or selling of the property. The waiver was set to expire on January 31, but now will be in effect through December 31, 2012.
This is great news for the thousands of potential homeowners who are first-time buyers or those who lack the down payment required on a conventional loan, as well as real estate investors that have built a business around rehabbing properties and selling to FHA borrowers.
As investors, how much of your business in 2011 has come directly from this waiver? We'd love to hear how this has helped your business.
