Mortgage and Real Estate Blog


HUD drops 90 day waiting period for financing flipped properties

Mortgages Unlimited - Mortgage Lender / Broker in St Paul Minneapolis Minnesota
Measure to help bring stability to home values and accelerate sale of vacant properties
WASHINGTON - In an effort to stabilize home values and improve conditions in communities where foreclosure activity is high, HUD Secretary Shaun Donovan today announced a temporary policy that will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties. The announcement is part of the Obama administration commitment to addressing foreclosure. Just yesterday, Secretary Donovan announced $2 billion in Neighborhood Stabilization Program grants to local communities and nonprofit housing developers to combat the effects of vacant and abandoned homes.

"As a result of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential homebuyers," said Donovan. "FHA has an unprecedented opportunity to fulfill its mission by helping many homebuyers find affordable housing while contributing to neighborhood stabilization."

With certain exceptions, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. This temporary waiver will 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," Donovan said.

In today's market, FHA research finds that acquiring, rehabilitating and the reselling these properties to prospective homeowners often takes less than 90 days. Prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition adversely impacts the willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-day period of time.

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.

"FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties," said FHA Commissioner David H. Stevens. "This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity."

The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of "flipping" where properties are quickly resold at inflated prices to unsuspecting borrowers, 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.

Specific conditions and other details of this new temporary policy are in the text of the waiver, available on HUD's website.


Visit our website for FHA Home Loan Financing in the Minneapolis, St Paul, Duluth, Rochester, Madison, and Milwaukee areas, or all of MN and WI

Comment balloon 3 commentsJoseph Metzler • January 15 2010 08:01PM
HUD drops 90 day waiting period for financing flipped properties
HUD TAKES ACTION TO SPEED RESALE OF FORECLOSED PROPERTIES TO NEW OWNERS Measure to help bring stability to home values and accelerate sale of vacant properties FHA DROPS 90 DAY WAITING PERIOD FOR FINANCING FLIPPED PROPERTIES … more
Lenders couldn't give you a bad loan today if you wanted one!
Delivering Value Added Home Loan Solutions in Minnesota Since 1991 651-552-3681 During the Christmas and New Year's Holiday I got a chance to catch up with a lot of my old friends and family and of course we got to… more
Almost A Third Of Loan Officers Taking Federally Mandated License…
This article ties in nicely with one I wrote back in August 2009. ARE YOU WORKING WITH THE RIGHT LOAN OFFICER OR MORTGAGE COMPANY? Joe Metzler is fully licensed to current requirements in both Minnesota and Wisconsin. He… more
Are Realtors Inept, Stupid & Completely Worthless..?
While this was written about Realtor's, you could easily replace Realtor with Loan Officer. Be sure to read " Mortgage Lender Shopping. How to do it right " Search Homes For Sale listing in the St Paul, Minneapolis area… more
FHA Rules. Eligibility on a New FHA Mortgage when you have a Short…
The FHA mortgagee letter described below provides guidance to lenders and underwriters regarding borrower eligibility when a previously owned property was sold for less than what was owed (short sale), or there is principal write down of… more
Trade up your house. 6 reasons why now is the best time
6 Reasons to TRADE UP your house TODAY! Have you thought about getting that bigger, better house in a better neighborhood? NOW IS THE TIME! St Paul, MN: Whether you need more space, want to upgrade your location, or for… more
Choosing your loan with "APR" CAN COST YOU MONEY
Choosing your mortgage loan with "APR" CAN COST YOU MONEY Minneapolis, MN: A borrower shopping for the best mortgage rate can easily be seduced by low rate offer s that are accompanied by low annual percentage rates (APR)… more
Had your credit pulled? BEWARE
HAVING YOUR CREDIT PULLED CAN CAUSE UNINTENDED CONSEQUENCES S St Paul, MN: The credit bureaus have found another way to increase their revenue at your expense, and WITHOUT YOUR PERMISSION. Having your credit pulled can cause… more
Home Buyer Tax Credit Extended - First Time Buyers and Repeat Buyers
Home Buyer Tax Credit Extended The House of Representatives on Thursday approved an extension of jobless benefits and a tax credit for home buyers, sending the measure to President Barack Obama for signature. The bill, approved… more
High Offers Offset By Low Appraisals - Fair And Balanced? Or Unfair?
With the amount of offers coming in on REO properties(Bank Owned Properties), there has been a new trend among buyers. The trend is to just offer as high as possible to get the property under contract. After the contract is accepted by the bank,… more