Federal Housing Administration (FHA) Commissioner David H. Stevens has extended FHA's temporary waiver of the "Anti-Flipping Rule" to help stabilize the current housing market.
In 2003, the Department of Housing and Urban Development (HUD) issued a rule that prohibited FHA from insuring a mortgage on homes that were owned by the seller for less than 90 days. This was issued to protect the consumers from a real estate predatory lending practice called "flipping" on mortgages insured by the FHA. Property "flipping" occurs when a property is resold for a sizeable profit at a falsely inflated price shortly after being purchased by the seller.
In February 2010, FHA lifted the ban for 1 year to attract buyers on foreclosed properties. FHA will be extending the waiver for another year, until January 2012. The waiver will allow homes to resell as quickly as possible.
However, the following requirements must be met before pushing through with the transaction:
1. All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
2. In cases in which the sale price of the property is 20 percent or more above the seller's acquisition cost, the waiver will only apply if the lender meets controlled conditions.
3. The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for Purchase program.
For more information on the Anti-Flipping Rule Waiver, please check out http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2011/HUDNo.11-007.
In 2003, the Department of Housing and Urban Development (HUD) issued a rule that prohibited FHA from insuring a mortgage on homes that were owned by the seller for less than 90 days. This was issued to protect the consumers from a real estate predatory lending practice called "flipping" on mortgages insured by the FHA. Property "flipping" occurs when a property is resold for a sizeable profit at a falsely inflated price shortly after being purchased by the seller.
In February 2010, FHA lifted the ban for 1 year to attract buyers on foreclosed properties. FHA will be extending the waiver for another year, until January 2012. The waiver will allow homes to resell as quickly as possible.
However, the following requirements must be met before pushing through with the transaction:
1. All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
2. In cases in which the sale price of the property is 20 percent or more above the seller's acquisition cost, the waiver will only apply if the lender meets controlled conditions.
3. The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for Purchase program.
For more information on the Anti-Flipping Rule Waiver, please check out http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2011/HUDNo.11-007.
No comments:
Post a Comment