FHA Extended their Flip Waiver Through 2012
HUD’s Temporary Waiver of FHA’s anti-flipping rule has been extended. In 2010, FHA temporarily waived the regulation through January 31, 2011, and later extended that waiver through the remainder of 2011. The extension is effective through December 31, 2012, unless otherwise extended or withdrawn by FHA. All other terms of the existing Waiver will remain the same. PrimeLending will close impacted loans that comply with the newly extended waiver, provided all other (existing) FHA requirements are met as listed below.
HUD‟s requirements when waiving regulations 24 CFR 203.37a(b)(2), requires:
§ A second full FHA appraisal for FHA transactions when the subject property is being resold within 90 days of the previous acquisition and the sales price of the subject property is 20% or more above the seller’s acquisition cost.
§ The second full FHA appraisal must verify the property seller has completed sufficient legitimate renovation, repair and rehabilitation work on the subject property to substantiate the increase in value or, in cases where no such work is performed, the appraiser must provide appropriate explanation of the increase in property value since the prior title transfer.
Important Notes:
§ The second full FHA appraisal must be ordered by the seller.
§ The second appraisal must be completed by an FHA roster appraiser, who must perform the second appraisal in compliance with all FHA appraisal reporting requirements.
§ All health and safety items noted in the appraisal and/or inspection must be completed prior to closing. Final inspection of these repairs will also be required.
§ The second appraisal may not be paid for by the borrower.
§ In their regulation Section 203.37a(c), HUD provides a list of sales transactions which are exempt from their rule on property flipping. Loans meeting HUD‟s exemption as listed in regulation Section 203.37a(c) are available for closing by PrimeLending without meeting the additional HUD requirements stated above.
§ If the second appraised value is more than 5% less than the first appraised value, then the value of the second appraisal must be the value reported on the conditional commitment.
§ The property seller’s acquisition cost is defined as what the seller paid to acquire the subject property. It does not include the cost of any repairs or improvements made to the property after purchase.
