A NEW LOOK AT FLIPPING PROPERTIES & FHA

The Federal Housing Administration (FHA) has temporarily suspended its 90-day rule against flipping properties.  The suspension is an effort to facilitate the sale of bank-owned properties.

Under the anti-flipping rule, the FHA will not insure a mortgage loan if the sales contract is executed within 90 days of the seller’s acquisition of the property.  Effective June 9, 2008, the anti-flipping rule has been waived for one year for properties acquired by lenders, their subsidiaries, and their outside vendors.

The purpose of FHA’s new policy is to facilitate the sale of bank-owned properties, given that foreclosed and abandoned homes harm neighborhoods and delay a community’s recovery.  However, FHA still requires homes to be “safe, secure, and sound,” which may not be the condition of certain foreclosed-upon properties.                                     San Diego County real estate blog