FHA Anti Flipping Extended thru 2011: Get the Inside Scoop from DC Fawcett

FHA extends suspension of ‘anti-flipping’ rule for another year

The rule was intended to prevent speculators from defrauding the government, but it also stifled the purchase and renovation of foreclosed homes by legitimate investors

For years the federal government prohibited the use of Federal Housing Administration mortgage financing by buyers purchasing homes from sellers who had owned the property for less than 90 days. The idea was to prevent speculators from defrauding the government through quick flips of houses – often involving straw buyers and corrupt appraisers – at wildly inflated prices.

One side effect of that policy had been to stifle purchase-and-renovate projects by legitimate, small-scale investors who buy houses after foreclosure or loan defaults and then resell them in substantially improved condition. In many parts of the country, first-time and moderate-income buyers often sought to buy these fixed-up houses using FHA-insured mortgages with 3.5% down payments, but were prevented from doing so by the “anti-flipping” rule.

Now you can continue to sell to FHA buyers which is huge in today’s lending environment. These are great loans to use for wholesale homes to first time home buyers and for wholesaling pretty houses.