RobertRange.com: Reno and Sparks Real Estate, Short Sales and Foreclosures

The 90 day flip rule has been temporarily suspended for all sellers effective February 1, 2010 and the waiver shall expire one year from February 1, 2010. This is great news for FHA Buyers as it opens the possibility for more inventory to consider. Note that the VA Flip Rule was waived earlier this year.

Pursuant to §7(q) of the Department of Housing and Urban Development Act (42 USC 3535 (q)) and 24 CFR 5.110, I hereby waive §203.37a(b)(2) of the regulations. The regulations at 24 CFR §203.37a(b)(2) provide that a mortgage for a property will not be eligible for FHA insurance if the contract of sale for the purchase of the property is executed within 90 days of the prior acquisition by the seller, and the seller does not come under any of the specific exemptions that apply to the 90-day rule. This waiver, which takes effect on February 1, 2010, is limited to those sales meeting the following conditions:

All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction. Some ways that the lender can ensure that there is no inappropriate conspiracy or agreement between parties is to assess and determine the following:
· 1) The seller holds title to the property;
· 2) LLCs, corporations, or trusts that are serving as sellers were established and are operated in accordance with applicable state and Federal law;
· 3) No pattern of previous flipping activity exists for the subject property, as evidenced by multiple title transfers within a · 12-month time frame (chain of title information for the subject property can be found in the appraisal report);
· 4) The property was marketed openly and fairly, via MLS, auction, For Sale by Owner offering, or developer marketing · (any sales contracts that refer to an "assignment of contract of sale," which represents a special arrangement between · seller and buyer may be a red flag).

In cases in which the sales price of the property is 20 percent or more over and above the seller's acquisition cost, the waiver will only apply if the lender:
· 1) Justifies the increase in value by retaining in the loan file supporting documentation and/or a second appraisal which · verities that the seller has completed sufficient legitimate renovation, repair, and rehabilitation work on the subject · property to substantiate the increase in value or, in cases where no such work is performed, the appraiser provides · appropriate explanation of the increase in property value since the prior title transfer: and
· 2) Orders a property inspection and provides the inspection report to the purchaser before closing. The lender may · charge borrower for this inspection. The use of FHA-approved inspectors or 203(k) consultants is not required. The · inspector must have no interest in the property or relationship or with the seller, and must not receive compensation for · the inspection from any other party than the lender. Also, the inspector may not compensate anyone for the referral of the · inspection. Additionally, the inspector may not receive any compensation for referring or recommending contractors to · perform any repairs recommended by the inspection, and may not be involved with performing any repairs · recommended by the inspection.

At a minimum, the inspection must include:
· 1) The property structure, including the foundation, floor, ceiling, walls and roof;
· 2) The exterior, including siding, doors, windows, appurtenant structures such as decks and balconies, walkways and · driveways;
· 3) The roofing, plumbing systems, electrical systems, heating and air conditioning systems;
· 4) All interiors; and All insulation and ventilation systems, as well as fireplaces and solid-fuel-burning appliances.