FHA seasoning rule changed?

Question

So, I need someone to help me clarify this. I'm getting blasted with this 90 day waiting period thing is apparently being put on hold until Sept. 2010

This is the latest email I got this morning:

[i] On Friday, FHA announced the suspension of the anti-Flipping 90-day waiting period.

Prior to September 14, 2009, FHA products were denied to buyers purchasing homes from investors that buy homes, rehab them, and sell them within a 90-day period. Previously, the only option to purchase these homes was through conventional financing (which requires a higher down payment) or a cash-only purchase.

This revision allows homebuyers to expand their market when searching for a home and gives them the opportunity to secure a much lower down payment. More investors and buyers will be encouraged to purchase homes due to this major change.

Take a look at the revision:

Section 203.37a(b)(2) of the FHA regulations, 24 CFR, is hereby waived for a period of one year, September 14, 2009 through September 13, 2010, with regard to sales of previously foreclosed or abandoned properties acquired and resold by for-profit and non-profit entities using funding from and performing under agreements with state and local government agencies under the NSP program.[/i]

http://www.hud.gov/offices/hsg/sfh/waivpropflip.pdf

So what's the deal? it seems to me that it's talking about lenders that have foreclosed and abandoned properties that don't need to have held the property for 90 days as opposed to an investor like myself who would do a double close to an FHA buyer.

My thinking is this, if the latter were the case, it would be HUGE news spreading like wildfire and all the 'Gurus' would already have the newest and best course/bootcamp/e-book etc... and we'd all have a million emails in our inbox

So what's the deal? who knows or can decipher exactly what's going on?

Nick Reuter · Answer

Here is a synopsis of what I pulled out of the rules: 1. Effective 2/1/2010 2. Transactions must be arms length â€“ no inappropriate collusion and no identity of interest between the buyer and seller or other parties. This can be determined using the following: 1. Seller holds title to the property 2. LLCâ€™s, Corporations, or Trusts which are sellers are operating within the law 3. No pattern of previous flipping exists for the same property within a 12-month time frame 4. Property was marketed openly and fairly via MLS, auction, FSBO (for sale by owner) or developer marketing 3. In cases in which the sales price of the property is 20 percent or more above the sellerâ€™s acquisition cost, the waiver will only apply if the lender: 1. Justifies the increase in value by retaining loan file supporting documentation and / or a second appraisal that verifies the seller has completed sufficient renovation / repair / renhabilitation work 2. Orders a property inspection and provides inspection to the purchaser prior to closing. FHA approved inspectors are not required. Inspection must include, at a minimum: 1. Structural inspection, including roof, foundation, floors, ceiling, walls, and roof 2. Exterior, including siding, doors, windows, decks, balconies, walkways, an driveways 3. Plumbing, electrical, heating, and air conditioning systems 4. Insulation and ventilation systems, including fireplaces and fuel burning appliances 4. Waiver is limited to forward mortgages, and does not apply to Home Equity Conversion Mortgage (HECM) for Purchase program

Will Barnard · Answer

The day that FHA removes the 90 day for us investors (if that ever happens) is the day that my successful REO business goes to ultra rich successful and I start doing my deals from a cruise ship! If I could open my properties and make available to all buyers including FHA, I would sell instantly EVERY time!

Steve Babiak · Answer

Extended now through December 31, 2012: http://www.gpo.gov/fdsys/pkg/FR-2011-12-28/pdf/2011-33411.pdf

Nick Reuter · Answer

Oh and here is the link for the HUD PDF directly in this thread: http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf

Ted Harris · Answer

Confucius Say .... And so it is ... http://www.biggerpockets.com/forums/67/topics/44249-fha-9-day-seasoning-waived-as-of-feb-1st-2-1- :D :idea:

Scott Hubbard · Answer

Will- Do we address you as "The Ultra Rich Will Barnard"? I hope we can still address you.....

Ted Harris · Answer

Don't you think it's just a matter of time before they remove the 90 day wait? Hopefully sooner than later .... :lol:

James Ward · Answer

What Will said! Because I would be sitting on an island doing the same thing.

Nick J. · Answer

That's what I thought and what I was telling the Realtors that were sending me this but I'm glad someone else put it in terms I could understand. thanks

Scott Hubbard · Answer

The way it was explained to me..... This rule change applies to the National Stabilization Program (NSP) grantees. This HUD program allows funding for certain for profit and non-profit entities to buy and rehab homes in certain areas hit hardest by foreclosures. This program is closed to new applications. Here is a link to HUD to read more about the program. http://www.hud.gov/offices/cpd/communitydevelopment/programs/neighborhoodspg/ As of now, the only entities who are waived are the REO lender and NSP grantees who are buying properties is designated areas on behalf of a local government entity. This unfortunately has no bearing on us investors.