By Dean Tucker, Waterstone Mortgage – Prime Equity Group in Boise Idaho
It appears that starting February 1st, 2010, HUD / FHA is going to loosen their guidelines pertaining to property flips.
THIS IS HUGE!!! According to HUD’s Shaun Donovan, some of the restrictions will be temporarily lifted beginning February 1st to further promote home sales. Here are some basic guidelines we have been able to research:
- The transaction must be “Arms Length”.
- The seller MUST hold title to the property at the time of the sale.
- There shall be no pattern or previous property flipping in the past 12 months.
- The property must be marketed openly and freely (i.e. MLS).
- If the home being “flipped” has a new sales price that is 20% + greater than the previous purchase price, then the seller must document any repairs and rehabilitation performed on the home and/or a 2nd appraisal will be needed and requested. (In these cases it should be expected that a home inspection will be required as well. Currently, FHA does not require home inspections OR termite / WDO inspections unless the contract calls for them. FHA only recommends the buyer order these services.)
Waterstone Mortgage Corporation is a true Mortgage Bankers, we underwrite and fund loans for over 30 of the top mortgage lenders in the country, the “Who’s Who” in mortgage lending. Our parent company, Waterstone Bank, is $1.9 Billion strong.
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