FHA Seeks Comments on Flipping Waiver Conditions

On January 15, 2010, the US Department of Housing and Urban Development (HUD) announced that it is temporarily expanding the property flipping waiver to include investors and entities that purchase foreclosures either singly or in bulk for resale. FHA is now seeking comments on the 90-day flipping waiver.

Under the waiver, homes that were foreclosed on and are being sold by the mortgagee or on its behalf may be purchased by Federal Housing Administration (FHA) borrowers without regard to the 90-day seasoning period.

To be eligible for the waiver, approved mortgagees must meet two conditions: 1) all transactions must be arms-length; and 2) when the sale of the property is greater than 20 percent above the seller's acquisition cost the lender must justify the increased value with supporting documentation or an appraisal and a property inspection must be ordered and provided to the purchaser before closing.