Finally the FHA did something right. With all of the new rules and regulations being discussed in the distressed property world, this extension of allowing purchases of flipped homes slipped by with little fanfare.
The Obama administration extended a policy allowing homebuyers to get government-backed mortgages (mostly FHA loans) to purchase properties owned for less than three months.
The Federal Housing Administration’s “anti-flipping” rule had been due to expire this past Monday but was extended through year-end. Extending this policy basically seems to be a no-brainer because it will allow investors to buy, fix up and sell foreclosures more easily. Otherwise, these properties could possibly sit and clutter an already overcrowded distressed property market.
The FHA originally imposed the anti-flipping rule, which barred loans on homes sold after less than 90 days in an effort to discourage people from buying properties, performing minimal or substandard repairs and reselling them at inflated prices. In most Bay Area markets, we don’t exactly have to worry about inflated prices.
Since the suspension of the rule nearly a year ago, more than 21,000 homeowners have received FHA loans on properties that were resold within 90 days.