For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.
By G. Steven Bray
If you rehab homes, your pool of potential buyers decreased at the beginning of the year. Buyers using FHA financing now cannot contract to buy your rehab until you’ve owned it for at least 90 days. FHA has never been a big fan of house flipping due to fraudulent flips that saddled it with big losses in years past. During the housing recession, FHA waived its rule against property flips allowing rehabbers to flip properties in 30 days.
But, the waiver expired on Dec 31st. For any purchase contract signed after that date, the old 90-day rule applies. FHA says the dangers of house flipping outweigh the benefits for first-time and minority homebuyers – those dangers being that flippers will sell poorly renovated homes at inflated prices to unsuspecting buyers. Of course, FHA ignores the fact that it doesn’t take 90 days to rehab most homes, and the rule reduces the number of quality, affordable homes available for these same homebuyers.
On a positive note, you still can sell to buyers using conventional financing as Fannie Mae and Freddie Mac only require a seller to own a home for 30 days.