90 DAY FHA SEASONING REQUIREMENT WAIVED
On Friday, January 15, 2010 HUD Secretary Shaun Donovan announced that sellers will no longer be required to hold properties for 90 days in order to allow for buyers to secure FHA loans requiring mortgage insurance. This temporary measure is scheduled to begin 02/01/2010 and continue for a one year period, unless otherwise extended or withdrawn by the commissioner. This new measure is to help stabilize neighborhoods where foreclosure activity is high.
In order to assure that predatory practics are not not allowed, there are several requirements that must be met in order for the 90 day rule to be waived:
- All transactions must be arms-length with no identity of interest between the buyer and seller;
- If the title is held by an LLC, corporation or trust, they must operate in accordance with applicable state and Federal laws;
- No pattern of previous flipping activity may exist for the property, by multiple title transfers within a 12 month time frame; and
- The property must also be marketed openly and fairly, via MLS, FSBO, auction or developer marketing.
If the sales price of the property is 20 percent or more over and above the seller's purchase price, the waiver will apply only if the lender justifies the increase in value by providing a second independent appraisal, or if the seller provides sufficient documentation to substantiate the increase in value. The lender is also required to provide the buyer with an inspection report which also must be paid for by the lender. However, the inspector does not have to be an FHA approved inspector or 203(k) consultant.
This waiver is also limited to forward mortgages and does not apply to the Home Equity Conversion Mortgage for Purchase program.
For more information on this program and what it may mean to you, please feel free to contact one of Sterling Real Estate's professionals for additional information. If you wish to read the entire waiver, click on the attached link for a copy of the release: http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf.