FNMA flipping rule (contract, sale, housing, buyers)
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I'm in the process as an investor, of putting a FNMA owned home under contract. It will be a cash sale, and the home needs a fair amount of repairs. I have just learned of the 120% rule that essentially says that I can't resell the home for more than 20% of the contract price for 90 days. But the home will also need about 20% of the contract price for repairs. Which means I can't resell for a profit? Do the cost of repairs after the sale from FNMA figure in or do they go purely by the contract price? Will an FHA underwriter nix my deal if my buyer goes that route?
I've heard that the FNMA property manager might agree to eliminate that resale stipulation under certain circumstances; anyone done this?
This question would be better served in the Mortgage forum.
Perhaps, but I am not getting a mortgage. Perhaps the people I sell the home to will, but the restriction is placed at the time that I as an investor offer the contract to buy the home.
This rule really sucks. I don't know how many investors will end up exiting the market due to it. The holding costs just rose for everybody, and for what? Because some folks are uncomfortable with people making a buck at rehabbing? Most if not all "new" created affordable housing are done by small investors rehabbing in my area. Most were not making big bucks to begin with. Now its even harder. They have to be turned around fast. Who's going to do them if there isn't any money in it anymore? The federal government? Give me a break.
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