WHAT A FLIPPING MISTAKE!
I suffered an embarrassing mistake in 2010.
While chatting with an investor/client, I was show-boating my knowledge of the anti-flipping rules. This fellow will surely give me oodles of business, I thought, when he cleared his throat, signaling an interruption. I was in the zone and my words were flowing like freshly melted snow down river.
"Excuse me Brian..."
"It's just....I think the FHA is suspending the anti-flipping rule."
The long-standing anti-flipping rule was no longer long-standing. This is an important item for any investor to know. It's a rule that prohibits the FHA from insuring mortgage on property bought and sold in the space of 90 days. For buyers hoping to flip a property, the rule is designed to prevent foreclosures from ending up as FHA inventory, thereby suffering a ding to its insurance funds.
Many investors are able to buy, rehab and list a property within a couple of months. But if buyers are unable to qualify for a 3.5% down payment under FHA guidelines, the pool of potential investors would swiftly evaporate.
I could feel the blood rush to my face in embarrassment. Blushing shouldn't beseige a man of my age, but I have little say in matters of physiology.
My next words highlighted my awkwardness, "Um, you don't say?"
Obviously, he do say!
"It's just, the last time I checked...." He understood the trail in my sentence and picked up the slack.
"Well, Brian, I believe the rule is being revised beginning February 1. (2010)"
Really? Another stupid utterance not intended as a real question.
My transgression was based on a development announced only days earlier. Still, I'm "suppose" to be the expert.
THE 2011 (NEW) SUSPENSION OF THE ANTI-FLIPPING RULE
Fast forward to the present. You won't catch me making the same mistake twice. No siree.
HUD has now extended the suspension of the anti-flipping rule, making investors again likely to bid for foreclosed and REO properties. Stepping up efforts to liquidate the volume of foreclosures, buyers may continue to avail themselves of the affordable 3.5% FHA down payment. The waiver, however, does not apply to reverse mortgages; properties that are sold at more than 20% of the acquisition cost, or transactions not conducted at arms-length.
The full scope: http://www.hud.gov/offices/hsg/sfh/currentwaiver.pdf
This is great news for investors, buyers, and the Realtors who represent them.
Brian L. Sirota, Esq., Broker/Attorney, BriStar Realty, Orange County, California