FHA 90 Day Flip Rule 2015 - Exclusions?

[Cheyenne Davis]

I've read that there are some exceptions to the 90 day flip rule that was reinstated on January 1, 2015. I'm hoping I can get some clarification from some of the FHA/mortgage experts here.

We purchased an REO from HUD back in early Feb of 2015 and have renovated it and just put it up for sale. We have 2 offers, both with FHA borrowers. We never planned on making the property available to FHA borrowers, but now that we've got these 2 offers, I'm tempted. I've both read online and heard from mortgage brokers that if you purchase a HUD home, you can resell it within the 90 days to an FHA borrower. Here's a copy/paste of what I read:

"For those who utilize FHA financing, the 90 day restriction will begin on the 1st of the year. All executed contract before 11:59pm on Dec 31, 2014 will still be waived. After, the first of the year, there will be some exceptions:

1. Hud properties under REO

2. Sales by other federal agencies of REO properties

3. Sales of properties by non profit organizations approved for resale by HUD

4. Sales by state or federal financial institutions such as Fannie, Freddie or GSE

5. Sales of Hud properties where the President declares it a federal disaster area"

I was told earlier today, by a mortgage broker, that the HUD exemption is only when a borrower is buying a home from HUD using FHA financing.

So, can anyone tell me with certainty what the correct answer is?

[Michael Smith]

Hi @Cheyenne Davis, if you purchased a home as a flip and the end buyer will be using FHA financing, you will need to wait until the deed has seasoned for 90 days before executing a contract. However, what I typically do in this situation as the lender is have the buyer go ahead and submit a TBD application to get a full Underwriting approval right now. Then, once the 90 days has passed we get a contract and order an appraisal - that way we can close in about 2 weeks from execution of the contract.