Jun

17

FHA Suspends Flipping Rule? Not Quite!

Filed Under Real Estate Investing, foreclosure | 2 Comments

When I first heard the news that the FHA waived the 90 day seasoning rule I thought it was cause for celebration because right now approximately 90% of the buyer loans are reported to be FHA loans. Dropping the 90 day seasoning requirement would be huge for flippers and the market in general.

Say it Ain’t So Joe!

The government who thinks they know more than anybody else put the 90 day seasoning requirement in place for FHA Loans because they thought this would deter flipping schemes. Chalk this up as another government screw up.

Seasoning had nothing to do with “flipping” schemes because the value of a property is determined by the property and not the time it has been owned. If an investor buys a 100K property for 50K and wants to sell it the next day for 100K what’s the problem. Definitely not the seasoning or time the property was owned.

The real problem has been fraudulent appraisals. After all, it is the appraiser setting the value for the new loan. The problem is obvious to anyone of intelligence… which by default rules out the government.

Check The New Waiver From HUD For Yourself

FHA Waiver From Gerald Romine.com

Who Really Benefits?

The lenders. Big surprise right? The bottom line is the lenders are now able to sell their REO’s that were acquired by foreclosure to FHA buyers without having any seasoning requirements. Which brings us back to the government screwing things up again. Funny how the lenders can quick turn a property but you and I cannot buy and sell a property with an FHA loan unless it is seasoned for 90 days.

What About Investors?

No change. You still can’t buy and sell a property to an FHA Buyer unless you meet the seasoning requirements.

Author: Gerald Romine