FHA Changes its Property Flipping Rules

HUD has announced a temporary change to its rule regarding Resale of Property Flips.  Flips less than 90 days old will be allowed for the next year.   See below the new rules and restrictions...

Resales Occurring Between 0 - 90 Days Following Seller's Acquisition

  • Previous Policy:  Resales of subject property within 0-90 Days of the seller's acquisition are ineligible. (Unless the seller falls into one of the exempted categories.)

  • New Policy:  HUD has issued a one year temporary waiver permitting FHA financing of a resale within 0-90 days of the seller's acquisition of the property. Bank of America is allowing the waiver provided the loan complies with the following conditions:

    • Increases in the property's sales price over the seller's acquisition cost must be less than 20%. No exceptions.

      • The seller's acquisition cost is the price the seller paid for the property only, exclusive of any commissions, repairs, and improvements.

    • All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.

Resales Occurring Between 91-180 Days Following Seller's Acquisition

  • Previous Policy:  If the resale date is between 91-180 days following the acquisition by the seller and the resale price is 100% or more over the price paid by the seller, the lender is required to obtain a second independent appraisal made by an FHA Roster appraiser.

  • New Policy:  No Change. Existing restrictions regarding resales between 91 - 180 days still apply.