According to HUD Secretary Shaun Donovan, a temporary ban on the "90 day holding rule" (also known as the "90 day no flip rule") will be relinquished for one year. There are certain restrictions, but "this temporary waiver will give FHA borrowers access to a broader array of recently foreclosed properties" (www.hud.gov). In short, the FHA has finally realized that the purchase, rehab and resell of a foreclosed property can often take less that 90 days in today's market.
This reversal of the "90 day no flip rule" is the first step toward stabilizing home prices and preventing any further deterioration of this economy. The effective date of this new ruling will begin February 1, 2010. In order to protect borrowers from fraudulent practices, the following guidelines must be upheld.
- If the resell of the home is 20% greater than the original purchase price then the lender must meet specific conditions.
- All transactions must be within arms length of both buyer and seller parties.
- The waiver of the "90 day no flip rule" will not apply to Home Equity Conversion Mortgages.
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