Nov 4, 2014
IS FHA Home Flipping Waiver About to End?
That’s an important question for buyers, sellers, investors and realty agents who’ve taken part in a nationwide wave of renovations and quick resale using Federal Housing Administration-backed
loans during the last four years.
The answer is yes — get your rehabs done soon. The federal agency whose policy change in 2010 made tens of thousands of quick flips possible — is about to shut down the program.
In an effort to stimulate repairs and sales in neighborhoods hard hit by the housing crisis and recession, FHA waived its standard prohibition against financing short-term house flips.
Under the waiver of the rule, you could buy a house, fix it up and resell it as quickly as possible to a buyer using an FHA residential loan — provided that you followed guidelines designed to protect consumers.
According to FHA estimates, about 102,000 homes have been renovated and resold using the waiver. The program has done its job, stimulated billions of dollars of investments, stabilized prices and provided homes for families who were often newcomers to ownership.
Even though the waiver program has functioned well, officials say, inherent dangers exist when there are no minimum ownership periods for flippers. Officials say it’s time to revert to the more restrictive anti-quick-flip rules that prevailed before the waiver:
The 90-day standard will come back into effect after Dec. 31.
Source: Ken Harney, The Nation’s Housing