FHA extends ‘anti-flipping rule’ through the end of 2011

Since the original waiver went into effect in February 2010, the FHA has insured more than 21,000 mortgages worth above $3.6 billion on properties resold within 90 days of acquisition, Stevens said.

“This action enables our borrowers, especially first-time buyers, to take advantage of this opportunity and buy a home that has recently been rehabilitated,” he said. “It will also help to move more foreclosed properties off the market and reduce the number of vacant homes in neighborhoods throughout this country.”

With certain exceptions, FHA regulations prohibit insuring a mortgage on a home owned by the seller for less than 90 days. 

Buying, rehabilitating and reselling foreclosed properties often takes less than 90 days, according to FHA research. Prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition “adversely impacts the willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-day period of time.”