Atlanta Real Estate Blog

Hud has announced a “temporary waiver” of what is known as thier 90 Day No Flipping Rule. This waiver will allow quick resale of foreclosure and other properties owned less than 90 days by the seller, help excess inventory move off the market, and, keep buyers with FHA insured loans from being **shut out of certain great homebuying opportunities – for example those in which an owner has acquired a home from a deceased family member (estate sale) or an investor who bought an investment property and did a nice rehab and where both simply want to resell the property. In such cases, without the New Hud Waiver, a buyer could not buy either home with an FHA loan if the seller had not owned the property for at least 90 days. FHA buyers lost out because these deals were only available to cash buyers or buyers with conventional loans.

**This actually happened to a first time home buyer client of mine not long ago – we put an offer on a great well rehabbed home that I had evaluated and found to be in great structural and mechanical condition. We got our offer accepted on what we thought was a standard resale property only to find out later that the owner was an investor who had acquired the property as a foreclosure only a few weeks prior. This meant my client would have to resubmit her offer some 75+ days later (offers from FHA borrowers cant be accepted by a seller until they have owned the property for at least 90 days) and store furniture for around 1oo – 120 days and move into a temporary apartment while taking the risk of something not closing over that long period of time. This also meant she would risk loosing out on the other great opportunities we had found if this deal did not go through – she (wisely) decided to let that home go and I crafted a legal termination notice to the sellers agent. Not long after, I found her a better property in a completly different and better area – in her case it was meant to be. In many other cases, however, FHA buyers have simply lost out on great deals because of what I have always considered to be a poorly conceived federal “NO FLIPPING” rule that only hurts honest sellers, investors, and buyers.**

Details of the HUD 90 Day Rule and the New Waiver set to take place starting February 1, 2010 and expected to last about 1 year:

Prior to this waiver going into effect, and with certain exceptions, FHA has for some time prohibited insuring a mortgage on a home owned by the seller for less than 90 days. HUD has approved a waiver to this policy in order to give FHA borrowers access to a broader array of recently foreclosed properties.

“This change in policy is temporary and will have very strict conditions and guidelines to assure that predatory practices are not allowed,” said HUD Secretary Shaun Donovan.

The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.

This waiver is limited to those sales meeting the following general 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 will only apply if the lender meets specific conditions.
• The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.

Feel free to contact Robert Whitfield at 678-585-9691 for more information on HUD and FHA regulations impacting buyers as well as information about buying REO, Foreclosure, and other properties.