…doesn’t mean it’s a done deal. Last week, HUD suspended it’s rule about “fixing and flipping,” which prevented buyers using FHA financing from purchasing a home that had been owned by the seller less than 91 days. This had caused buyers using FHA loans here in northern Virginia (and other parts of the country, surely) to miss out on perfectly good properties that had been purchased and quickly refurbished before being put back on the market. I was ecstatic to hear this news, but after chatting with a lender I work with, I realized that this is only the first step. Scott Fournier, of Integrity Home Mortgage, wrote to me to clarify:
Please remember that this FHA letter is just the beginning… banks and investors have yet to comment, adopt, decline or modify this as an option. This letter being generated by FHA doesn’t mean that financial institutions have adopted this exception… and if they do, we have yet to see their overlays to the exception. Right out of the gate, the FHA letter suggests this exception to the 91 day rule is for properties that don’t have a 12 month history of flipping, that have documented renovation and rehab, and that are less than 20% increased from prior to current price. Those properties above 20% would require home inspection and full 2nd appraisal. This is FHA’s wording… not yet to say what banks will add to this.
Now, we wait and see. The suspension of the rule is set to begin on February 1, so hopefully we will have some clarification from lenders and investors before then. Questions? Comment below, shoot me an email, or hit the Ask Heather button, I’m happy to answer.