FHA PROPERTY FLIPPING GUIDELINES

For investor owned properties documentation must be provided showing the seller is the owner of record prior to the date of execution on sales contract by the buyer.

How FHA defines prior sale occurring...

FHA defines the seller’s date of acquisition as the date of settlement on the seller’s purchase of that property.

The resale date is the date of execution of the sales contract by the buyer.

The seller must also be the owner of record evidenced by a sales history report, copy of the recorded deed from the seller, or other documentation such as a copy of the property tax bill, or title commitment or binder.

For sellers not on the exception list (below), contracts dated prior to the 90 day period will not be eligible for FHA

Homes being SOLD within 0-90 days of ownership...

Homes being "flipped" within 0 to 90 days of original acquisition date (as defined by FHA) are not eligible for FHA financing - except for:

• Homes being sold by Relocation agencies

• Re-sales by employers to employees

• Builders selling a newly built home

• Sales by HUD of Real Estate Owned (REO)

• Inherited property

• Real estate sales owned by Federal Agencies (i.e. VA, FDIC, Rural Housing).

• State and Federally chartered financial institutions and government sponsored enterprises (GSE)- (e.g. Freddie Mac, Fannie Mae, Bank foreclosures)

• Nonprofit Organizations approved to purchase HUD REO single family properties at a discount with resale restrictions http://www.hud.gov/offices/hsg/sfh/np/np_hoc.cfm

• Local and state government agencies and the instrumentalities of local governments approved by HUD to provide secondary financing http://www.hud.gov/offices/hsg/sfh/np/np_hoc.cfm

• Presidential declared disaster areas (must be sold in the time frame the exception will be in effect and the specific disaster area affected) http://ahmweb.com/Admin/PPUpload/Declared%20Disast er%20Areas%202006.xls

Note: The Homeownership Centers cannot grant exceptions.

Homes being SOLD within 91-180 days of ownership...

Homes being "flipped" between 91 and 180 days of original acquisition date (as defined by FHA) are eligible for FHA financing - provided:

• Re-sale price to FHA mortgagors is less than 100% greater than previous sale

• If re-sale price is 100% or greater than the previous sale, a second appraisal is required and must support the value

• Additional documentation may be required showing cost and extent of rehabilitation, if applicable