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FHA Flipping

FHA Flipping refers the practice of reselling a home acquired recently under an FHA loan program, often with a motive to earn profit through the transaction. There is nothing illegal in selling a residential property to a third part within a few weeks of acquiring the same, but there exist some HUD guidelines that must be followed to keep with the state law and stay out of any problem that might occur.

The FHA Flip Rule is a way to put restrictions on such practices that involved fraudulent activities, often with the collusion of lenders and appraisers. The fraudulent practices include inflation of sales price unnecessary and wrongful appraisals among many others.

The complete guidelines regarding FHA flipping rule and exceptions can be found in HUD Handbook 4155.2. There may be properties that do not meet the exception criteria. Such properties may qualify under FHA flipping waiver 2011, which primarily aims at selling the foreclosure properties, but are not limited to only foreclosed homes.

FHA Flip Rule 2011



The anti flipping rule of the US Department of Housing and Urban Development came for the first time in 2006 whereupon a clause prohibiting property flipping in the HUD/FHA single family mortgage insurance programs was added at 24 CFR 203.37a with certain exceptions.

This rule and the mortgagee letter 06-14 became effective immediately. However, in later years certain additional exceptions were added and at times rules regarding flipping waiver have also been incorporated.

This waiver, which was announced in January 2010, was initially for the sales transactions occurred before February 1, 2011. The waiver is recently extended to make it effective till December 31, 2011.

According to this waiver policy, the prohibition to use FHA financing in order to purchase single family properties that are being sold within 90 days of the previous acquisition is waived. The purpose of this waiver extension is to encourage investors to buy a foreclosed property, renovate it and finally sell it in the open market to increase availability of affordable housing.

The complete information regarding FHA anti flipping guidelines and the extensions to flip waiver rules can be had from HUD website. A PDF file exists that can provide you answers to all your questions regarding flipping rule update for 2011. You can also use resources available online at fhaoutreach.gov.

Website: www.hud.gov





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