The waiver for the FHA 90-Day Flip Rule (click here to read about the 90-Day Rule and click here to read about the waiver enacted back in 2010) was once again expiring this month, and once again has been extended by the FHA through the beginning of 2012.
To put it simply, this means that investors who want to resell to FHA buyers still have the ability to complete their deals, even if the seller hasn’t owned the property for at least 90 days (the original rule was that the seller needed to own the property for 90 days before reselling to an FHA buyer). While the waiver extension was expected, it’s still great to hear officially, as this waiver has been one of the keys to our success over the past two years — being able to buy and resell quickly alleviates many of the risks associated with house flipping.
Here is an article from CNN on the extension:
now if we could get Fanny Mae to discontinue their stupid 90 day deed restriction. That’s really helping things!
Anyone heard of the “double flip rule?” We are thinking of purchasing a property from another investor that just bought this property at auction. We want to fix and then resell on MLS. Our tilte rep says that the 90 day FHA exemption would not apply because of this: “No pattern of previous flipping activity exists”. Thanks in advance.
My understanding of the rule is the same as your title agent. They seem to think multiple changes of ownership is somehow a indication of fraud. I applaud you for getting your deals finished in 90 days or less. It is almost impossible here. Loan packages are taking about 45 days to complete. I’ve only been able to take advantage of the 90 day rule once and that was the 87th day!
Hey Scott,
Your title attorney is correct — multiple title transfers within a 6-12 months timeframe (depending on the underwriter) will trigger FHA red-flags and may make it VERY difficult to resell the property to an FHA buyer within that 6-12 months.
I’ve actually been meaning to write about this for a couple months now, after another investor we work with bought a property from a wholesaler and had some difficulty reselling it. Most of the major lenders refused to underwrite the sale for 6 months after the most recent title transfer, though in the end, he was able to find a bank to do the deal. So, while it’s not impossible, it can be very tricky.
This is why whenever a wholesaler brings me a deal these days, I try to find a way to purchase the property without a title transfer (for example, using a business entity, a trust, a quit claim deed, etc).
J Scott, I am looking to buy a house in Georgia, that was purchased by an investor Dec. 3, 2011. It has been flipped, and listed to sell this week. I want to go FHA. Do you know a Lender that will do the FHA Flip waver out here in Georgia? The profit margin is over 20% (if that matters).
Thanks!
Hi D Bowers,
If I understand you correctly, an investor bought the property in December, fixed it up, and you now want to buy it from him using an FHA loan…is that correct?
If that’s the case, yes, I certainly have a fantastic mortgage broker (the one that I recommend to all my buyers and also used to refinance my personal residence a few months ago) that can get this done without any issues (assuming there are no issues with you qualifying for an FHA loan). I’ll send you his contact info in a separate email.