FHA Allows Flipping with Restrictions

I received this email from one of my preferred lenders today.  See the email regarding FHA lifting the 90 day restriction on buying houses that have been rehabbed and make sure you read the qualifiers at the bottom.   And if you need a lender, Tom is a good one.

*** *** ***

FHA has suspended the anti-flipping rule for homes owned less than 90 days by the previous owner though January 2012. For years, the FHA has had a strict prohibition: It wouldn’t insure a mortgage on a house if the seller had owned it for less than 90 days. The ban was a reaction to fraudulent quick flips of houses that inflated their values far beyond market worth.

The FHA maintained its 90-day anti-flipping rule through much of the past decade. But now it is suspending the policy, at least for the next year. In an advisory to lenders, FHA Commissioner David H. Stevens said the agency will again provide mortgage insurance for some purchases in which the seller had closed on the property less than 90 days earlier. The objective, Stevens said, will be to speed up sales of renovated houses to first-time and other purchasers. With foreclosures at record levels — an estimated 2.8 million filings last year — many communities are faced with excesses of bank-owned properties sitting unsold, often in poor repair.

This is a huge change and can bring you customers that cannot put down 5-10% and qualify for conventional loans at the lowest interest rates. By waiving the 90-day rule, private investors will be more likely to bid on these houses, fix them up and sell them to buyers who will now be able to gain early access to FHA financing, which offers 3.5 percent down payments. The federal government hopes to help low-down-payment home buyers, investors who fix up foreclosures, and communities burdened with too many bank-owned and foreclosed homes — all with one potentially far-reaching policy change.

There are two key restrictions designed to protect end buyers and the FHA alike:

— No game-playing or conflicts of interest among buyers, sellers, realty agents or others involved in the deal are allowed. “All transactions must be arm’s-length, with no identity of interest” among any of the participants.

— Price run-ups must be relatively modest and justifiable from the time of the investor’s acquisition to what is paid by the applicant seeking FHA financing. Generally, the limit will be 20 percent.

When the price jump exceeds 20 percent, the FHA expects participating lenders to require extensive documentation of the renovation expenditures made by the investors to justify the hefty price increase. Lenders also are required to order an independent property inspection so the purchaser can understand the house’s physical condition and the improvements made.

How can you use this news to get business in a tough market?

·         Contact data base that foreclosures that are offered by investors at great prices are available for 3.5% down FHA loans at low interest rates, reasonable loan underwriting, up to loan amounts of $271,050 in the KC area

·         Contact investors to seek listings of their flip homes or to get a list of homes they have to send to your data base

·         FHA still allows a non-occupying co-borrower to qualify with income. This is great for a parent that wants to help the next generation to get into a home, but they cannot qualify because of income. The occupying borrower does have to have a decent credit, but does not have to have any income. Send your data base this idea to get a child still living at home into a home, or still renting. They can buy this foreclosed homes at depressed values and then reap the profits when sold

Call me with your customers that need to be pre-qualified.

Life is Good!

Tom Brassfield
7400 W 135th Street
Overland Park, KS 66223
Mortgage Loan Officer
Office 913-752-5387
Fax 877-786-3585


Filed under Financing Options

14 responses to “FHA Allows Flipping with Restrictions

  1. During the previous decade or so, an incredible number of homeowners have either lost their
    homes, or are facing the possibility of losing their property or
    other real estate in a foreclosure or short sale. Realize that you can lose this money if you default on the construction loan at a later date.
    Installment loans are usually simple interest loans so that you pay interest only on the outstanding balance.

  2. The lender will then request for income documentation like the pay stub or W2.
    So you’ll know exactly what condition the home is in
    and can appropriately list the issues that may be of concern.
    Generally the rates are offered as low as three percent with closing
    costs included.

  3. Jump rings or loops can be used to attach clasps near the ends of
    the jewelry. You can still do beaded bracelets that
    are very fashionable even though you are not using wire stringing material.
    After putting all the pieces into place, implementing them is much easier, and your excitement for your passion project
    will translate into a passion that is reciprocated by your customers.

  4. However, the interest that they charge a bit higher compared to
    those of banks. Before you fix and flip a property for profit, you should
    determine if you have enough funds to see a rehabbing project through.
    They usually buy and sell real estate and pursue
    to invest into other type of projects to enable the capital to continue running.

  5. The best thing about this company though is that it is committed in building its relationship with its current and future clients, by providing competitive rates and excellent service.

  6. There are a few benefits of availing personal loan for
    an overseas travel like.

  7. Human life is full of changing phases and one need
    to accept everything that flows in a way.

  8. You will also want to take a look at the original loan contract to make sure that the loan is

  9. You do not incur interest, but you may have to pay your bank.
    Other ways exist to obtain financing even though your credit
    has not been reestablished. 99 street price,
    this drive is the biggest bargain we’ve seen so far in terms of price per
    unit of storage space.

  10. You can now begin making and taking company calls that aren. A
    good memory technique that can help you when you’re learning a different language is to connect foreign words to
    things which are familiar to you. It becomes much easier to learn when you find a teacher, course or system that really appeals to you.

  11. However, the interest that they charge a bit higher compared to those of banks.
    These money lenders are least bothered about your credit
    or income. The variation in the interest rates is the unique attribute of the commercial hard money loans.

  12. Men can be affected by age as well, especially as libido tends to decrease with
    age. If you don’t mind spending the money, there
    are now much easier ways to monitor fertility.

    Well I have written out the things I did around the time
    I got pregnant.

  13. The second stage of this sequence is the purchase of gems by
    the more acknowledged merchants from those of the later group, mentioned above.

  14. To learn more about how the law of attraction and money work together, read on. The goal,
    instead, should be to foster a feeling of happiness, gratitude, and well-being.

    Which Of These Tantric Secrets Will Make Her Call
    You GOD.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s