HUD Suspends FHA "Anti-Flip" Rule

HUD Suspends FHA "Anti-Flip" Rule!

What is a "flipped" home? As you can probably guess, this is when someone purchases a home with the intent to resell it for a profit.

The general rule had been that a buyer using an FHA loan could not purchase a flipped home until the title to the home has been held by the current seller for 90 plus days. A couple years ago, HUD excluded bank owned properties from this rule. Typically investors who are flipping property do some improvements to the property and list it within a few days or couple of weeks of taking title to the property. It is not uncommon to see an agent-only remark in the MLS stating: "Sorry, no FHA loans for 90 days due to the anti-flipping rule."

According to HUD, they will make an exception to their anti-flipping rule for one year. This new exception to the rule will be effective starting February 1, 2010.

I shall be curious to see how the lenders who fund FHA loans react to this. Just because HUD allows flipping, does not necessarily mean that a lender will permit it.  We will just have to wait and see!

So if you are in the market to purchase a Home ~ just be sure to ask your loan officer about how this rule may affect your ability to purchase a property that is being flipped if you are using FHA financing for your mortgage.