FHA 90 Day Flip Rule Question for you mortgage lenders! (loan, 2014, approved)

[Ashl10]

This is for the mortgage lenders out in city data land. This FHA 90 day rule is it followed by all lenders or just some? Also with the 90 days, is it you can't close before 90 days or you can't execute a contract before 90 days.

I've been getting conflicting answers on this so wanted to get more info from different lenders!

[FalconheadWest]

I'm not a mortgage person, but you're going to get an answer of "it depends" as each situation is different.

If the seller is willing to provide their invoices from the work done to warrant an increase in price from what they just paid for it, you don't have to wait 90 days. But you need a cooperating seller for that.

[Pfhtex]

The eligibility of a Property for a Mortgage insured by FHA is determined by the time that has elapsed between the date the seller has acquired title to the Property and the date of execution of the sales contract that will result in the FHA-insured Mortgage.

FHA defines the seller’s date of acquisition as the date the seller acquired legal ownership of that Property. FHA defines the resale date as the date of execution of the sales contract by all parties intending to finance the Property with an FHA-insured Mortgage.


Required Documentation:
The Mortgagee must obtain a 12-month chain of title documenting compliance with time restrictions on resales.


***Exceptions to time restrictions on resale are:

 Properties acquired by an employer or relocation agency in
connection with the relocation of an employee;

 resales by HUD under its REO program;

 sales by other U.S. government agencies of Single Family
Properties pursuant to programs operated by these agencies;

 sales of Properties by nonprofits approved to purchase HUD
owned Single Family Properties at a discount with resale
restrictions;

 sales of Properties that are acquired by the seller by inheritance;

 sales of Properties by state and federally-chartered financial
institutions and Government-Sponsored Enterprises (GSE);

 sales of Properties by local and state government agencies; and

 sales of Properties within PDMDAs, only upon issuance of a
notice of an exception from HUD.


The restrictions listed above do not apply to a builder selling a newly built house or building a house for a Borrower
planning to use FHA-insured financing.


***Due to varied Risk Thresholds among lenders, you may see a tightening of the above guidelines, but not a loosening.

[Pfhtex]

Hey, in deference, and with respect to FalconheadWest: there was indeed a significant easing of guidelines in this area, for four years, that expired 12/31/2014. IMO, will all the other new safeguards, the two-appraisal rule that applies to the 91-180 day period would be a sufficient solution to any misdeeds or collusion.

FHA has been making significant "makes sense" changes, and I'd have to think this should be on the ballot this year. Maybe also increase up-front MIP and reduce the monthly, and allow the monthly to eventually expire, such as it used to. Amount of up-front MIP would be fico-sensitive, up to, say, 3.5% (580-619 fico?) so FHA never walks in upside down, but lower-credit borrowers aren't hammered with that big monthly MIP hit that would otherwise last forever. Get back to FHA being a full-term loan option with significant value, while also mitigating risk. I literally just made that up. Thanks, Margarita!