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Investors Exempt From 90-Day Rule

Posted on January 20, 2010 by tim in Buying, FHA, First Time Home Buyer, Investor, Mortgage, Selling

An update from FHA was released on Friday January 15th, 2010, regarding the 90 day regulation on the resale of a purchase property. Effective February 1st 2010, FHA/ HUD will not require that a seller of a property be on title for 90 days or more in order to sell the property to a borrower acquiring FHA financing. This is an incredible opportunity for many buyers in today’s market who require a loan with a 3.5% down payment – especailly first time home buyers. The change will take effect for a period of one year.

To protect FHA borrowers against predatory practices of “flipping” where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general 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.
  • If sale price is 20% or more of the seller’s acquisition cost, the lender must:

a. provide supporting documentation and/or a second appraisal and

b. order an inspection of the property and provide it to the buyer.

  • The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.

Specific conditions and other details of this new temporary policy are in the text of the waiver, available here.


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