Great News for Investors! FHA Extends Anti-Flipping Waiver

FHA has announced that it is extending its “anti-flipping waiver” through the end of 2012. The purpose is to accelerate the resale of foreclosed properties. The FHA’s anti-flipping legislation took effect in 2003 and was intended to slow home-flipping during the housing boom. The rule was FHA-backed loans could not be used to purchase homes owned by the seller for less than 90 days. However, the waiver will enable investors to continue to purchase, refurbish and quickly sell homes to owner-occupants qualified for FHA loans.

There are still some FHA restrictions on house flipping, though. The sales must be “arms-length” and the sales price cannot be more than 20 percent of what the seller bought the property for unless the seller has documentation of renovation costs that justify the extra expense.

So, if you plan to buy and flip retail this year, be sure to file all receipts and invoices for materials and labor for the rehab work completed. Also, maintain a well organized and detailed list of work completed so that an FHA underwriter can easily see what work was done.