FHA anti-flipping waiver can still derail a home buyer due to guidelines

Investors with money were smart to buy distressed properties and re-sell them. Buyers are happy to find properties within their budget range with a minimun of 3.5% down. Neighbors are  happy the blight in their community may soon have an appreciative home owner.

BUT when it comes to FHA loans, strict guidelines are in force for flipped properties.

The one that could trip everyone:

"In cases where the sales price of the property is 20% or more OVER and ABOVE the seller's acquisition cost, the waiver will apply only if the lender:

1. Justifies the increase in value by retaining in the loan file supporting documentation and or a second appraisal which verifies that the seller has completed sufficient legitimate renovation, repair and rehabilitation work on the subject property to substantiate the increase in value...ot in cases where no such work is performed, the appraiser provides appropriate explanation of the increaase in property value since the prior title transfer."

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July 15 2010 - Alameda
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Replies (1)

Seem Un-Constitutional to me. Controlling or attempting to control and restrain trade. Limiting my profit potential. Stating that investors can only make so much and not anymore than that.

Thanks for the insight.

Good Luck!

James Callas - Realtor®
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July 15 2010
 
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