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                                      The new “flipping rule”

Us Department of Housing and Urban  Development (HUD) enforces

a temporary policy that will expand access to FHA mortgage

insurance and allow for the quick resale of foreclosed properties.

Personally, I think the new policy will help the real estate market

recover expeditiously removing inventory quickly and allowing FHA

buyers to get into homes faster. Implementing the new guide lines

will enable buyers to utilize the tax credit that expires soon

(buyers need to be under contract by April 30th and closed by

July 01, 2010). This policy change which began February 01, 2010                     Picture courtesy of the New York Times

will permit buyers to use FHA-insured financing to purchase HUD- owned

properties, bank– owned properties as well as privately owned resold properties.

The new policy is effective for one year.  Previously, Sellers could not sell their

homes to FHA buyers until they owned the home for 90 days. In

order to protect FHA buyers from predatory practices of flipping             

where properties are sold quickly at inflated prices to unsuspecting

buyers, the following criteria must be met:

*It must be an arms-length transaction, with no identity of interest between the buyer and seller or other parties

participating in the sales transaction.

*In cases where the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver

will only apply  if the lender meets specific conditions.

*The waiver is limited to forward mortgages and does not apply to Home Equity Conversion Mortgage for purchase program.

Specific conditions and other details of this new temporary policy are available at HUD’s website.

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