Orlando Condo Investors:Â Get ready to rev up your business volume.
Starting February first, the department of Housing and Urban DevelopmentÂ (HUD) is waiving its 90-day “anti-flipping” rule for FHA financing.
Investors who buy and fix up foreclosed and bank-owned properties now will no longer have to wait for 90 days before looking for FHA buyers. UnderÂ the priorÂ policy, FHA financing was prohibited on purchases where the seller had acquired the property less than 90 days before the next sale.
The notion was to avoid reselling of condos in short time periods, sometimes with fraudulent appraisals to back spiraling prices – and exposing FHA to greater risk of losses.
Last week FHA commissioner David Stevens sent out an advisory to lenders that the agency plans to waive this policy, with certain key restrictions, for one year, until February of 2011.
Recognizing that foreclosures are now an economic burden in many markets, and that greater availability of FHA mortgage insurance could help move vacant houses into the hands of investors who’ll repair and improve them, Stevens said: “HUD recognizes that “acquiring, rehabilitating and then reselling” foreclosed is often possible in far less than 90 days.”
Note: When the selling price is 20 percent or more above what the seller paid, lenders will need to document the renovation and improvement expenditures by the seller to justify the price – usually with the help a second appraisal to confirm the valuation.
Lenders will also need to order an independent property inspection and provide the report to the purchaser before closing.
Investors intersted in Orlando bulk condo buys should call 407-290-3408.