FHA WAIVES 90-DAY ANTI-FLIPPING RULE
In an effort to facilitate the sale of bank-owned properties, the Federal Housing Administration (FHA) has temporarily suspended its 90‑day rule against flipping 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 is 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 in a “safe, secure and sound condition” which may not be the condition of certain foreclosed-upon properties.