Does FHA have requirements for homes sold within 90 days?
Property Flipping is a practice whereby recently acquired property is resold for a considerable profit with an artificially inflated value
FHA Mortgage For Resales Occurring within 90 Days or Fewer After Acquisition:
A property that is being resold within 90 days or fewer following the current owner’s date of acquisition is not eligible for an FHA-insured Mortgage.
FHA Mortgage For Resales Occurring Between 91-180 Days After Acquisition:
A Mortgagee must obtain a second appraisal by another appraiser if:
- the resale date of a property is between 91 and 180 days following the acquisition of the property by the seller’s; and
- the re-sale price is 100 percent “over the purchase price” paid by the seller to acquire the FHA mortgage property.
The required second appraisal from a different appraiser must include documentation to support the increased value.
Exceptions to FHA property flipping restrictions are made for:
- properties acquired by an employer or relocation agency in connection with the relocation of an employee;
- resales by HUD under its real estate owned (REO) program;
- sales by other U.S. government agencies of Single Family Properties pursuant to programs operated by these agencies;
- sales of properties by nonprofits approved to purchase HUD-owned Single Family properties at a discount with resale restrictions;
- sales of properties that are acquired by the seller by inheritance;
- sales of properties by state and federally-chartered financial institutions and Government-Sponsored Enterprises (GSE);
- sales of properties by local and state government agencies; and
- sales of properties within Presidentially Declared Major Disaster Areas (PDMDA), only upon issuance of a notice of an exception from HUD.
- The restrictions listed above and those in 24 CFR 203.37a do not apply to a builder selling a newly built house or building a house for a borrower planning to use FHA-insured financing.
FHA’s property flipping regulation 24 CFR 203.37a is available at: https://www.ecfr.gov/
For more information see Handbook 4000.1 II.A.1.b.iv(A)(3) available at: https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh