From: Tracy O
Sent: Thursday, February 04, 2010 12:15 PM
To:
Subject: FHA Waiver For Property Flipping - STAY INFORMED!
Importance: High
This waiver applies to 203.37 of the HUD Regulations; a mortgage for a property will not be eligible for FHA if the contract of sale for the purchase of the property is executed within 90 days of the prior acquisition by the seller. This is now temporarily being waived. The objective is to speed up sales of renovated houses.
This waiver takes effect for sales contracts dated on or after 2/1/10, case #’s issued before 2/1/10 are acceptable. This waiver is good thru January 31, 2011 and must meet the following:
1. All transactions must be arms length with NO identity of interest between the buyers, sellers or other parties participating in the sale.
a. Verify that the Seller is in title and no apparent family or business relationship exists between the parties of the loan or sales agreement.
b. LLC, corporations and trusts as sellers were established and are operated under state and federal laws
c. NO pattern of previous flipping exists such as multiple transfer of title within a 12 month period ( more than 2 ).
d. Proof that the property was marketed open and fairly via MLS, auction, sales by owner or developer. Assignment of contracts are considered a RED FLAG and the investors will not allow them.
2. In cases where the property sales price is 20% more than the sellers purchase or acquisition cost, the waiver will only apply if:
a. The Broker/Lender orders a property inspection report and provides a copy to the buyer prior to closing (disclose on GFE #3)
The cost of the inspection can be charged to the borrower however the inspector can not have any interest in the property or relationship with the seller and may only be paid by the Broker/Lender. The inspector can not pay any one for referrals. The Inspection must include the following:
· Structure, including foundation, floor ceiling, walls and roof.
· Exterior, including siding, doors, windows , decks, balconies, walkways and driveways
· Plumbing, electrical and heating and cooling systems
· All interiors
· All insulation and ventilation systems, as well as fireplaces and solid fuel burning appliances.
3. The waiver is limited to forward first mortgages and does not included or apply to Home Equity Conversion Mortgages (HECM).
843.416.2057 phone
843.416.2257 fax
E Mail : BOShea@WandoHomes.com
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