Anti-Flipping Law Update...
Good News For You?
The Anti-flipping law update announced by the FHA in June 2008 has been greatly misunderstood by a number of investors.
The original version of the anti-flipping law imposed a 90-day period during which a buyer being financed with an FHA-insured loan, could not purchase a property after its previous sale. While this rule was instituted to curb illegal flipping, it put a serious damper on the activities of legal investors and wholesalers who simply want to buy and quickly re-sell homes (without artificially or illegally inflating value). Since, the FHA's announcement of an amendment to the Anti-flipping rule, multiple web sources have misinterpreted the amendment in ways that may have you and other real estate wholesalers believing you can now get re-sell your inventory to a FHA insured buyers. Not so...
Anti-flipping law Update 2008 While you may have heard that the FHA waived the Anti-flipping rule for one year (beginning June 2008), the waiver apparently applies only to properties sold by the mortgagees(lenders)who have taken the properties back by foreclosure. This includes state-or federally-chartered lending institutions (banks), government-sponsored enterprises(fannie mae and freddie mac),or their subsidiaries and the vendors hired by them to sell their properties. The waiver was specifically extended to cover mortgage lenders who were not previously exempted from the 90 day resale restrictions (private mortgage lenders, for instance) and REO realtors and firms who were hired by exempt firms to help sell their properties So if you are buying REOs (Bank owned properties) to re-sell at wholesale prices to FHA-financed investors(HUD 203K Rehab loans) or you want to rehab them for resale to FHA-insured retail buyers, then this is good news. If you're new to wholesaling, flipping bank owned homes is not impossible...it just has a few more wrinkles than the usual. Disclaimer: As usual I should remind you that I am neither an attorney nor an accountant. (Just a strategic real estate coach.) No information on this website should be construed as legal advice. It is merely for informational and entertainment purposes. Seek legal advice from a competent attorney near you.
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