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    TO FLIP OR NOT TO FLIP

    TO FLIP OR NOT TO FLIP

    Once upon a time FHA enforced a 90 day anti-flipping regulation.  But desperate times calls for desperate measures  and with the voluminous inventory of foreclosures – with more in the pipeline,  the Department of Housing and Urban Development waived  the flipping regulations in 24 CFR §203.37a(b)(2).  So no fear,  even if you are buying to flip you can obtain FHA financing.

    The waiver began on February 1, 2010 and originally was set to expire on January 31, 2011.  But as expected with no end to foreclosure inventory piling up,  the FHA  “anti-flipping” waiver has been extended through the end of 2012.  

     “FHA remains a critical source of mortgage financing and stability and we must make every effort to promote recovery in every responsible way we can.” Carol J. Galante, the acting Federal Housing Administration commissioner, said in a statement.

    FULL CIRCLE

    The anti-flipping rule began in 2003 as home flipping was the career of choice for any true hot blooded American entrepreneur of the day.  FHA backed loans could not be used to purchase homes that the seller had owned less than 90 days. Unfortunately, Wall Street had no problem with flippers, and in fact encouraged millions of American’s to flip the home, take out equity – every six months if they wanted to, or what the hell, buy five or ten homes if they were so inclined. Some all on the same day!  I’ve seen this in securitizations. 

    Our government, in their infinite wisdom has instituted: waiver of the “anti-flipping rules,” HAMP, HARP, and most recent the blood boiling test project to sell Fannie and Freddie properties in bulk to the same vultures who created the mess. I can’t help but think, why they continue to address the fallout and never address the cause?  How can they sell to the public that they could not work out the loans for the homeowners because they would lose money, but taking massive losses on bulk sales, or waiving flipping requirements for investors to buy properties cheap and resell them is a better strategy. 

    Since the waiver took place in 2010, FHA has insured nearly 42,000 mortgages worth more than $7 billion on homes resold within 90 days of the last purchase, according to HUD. “It’s certainly an inducement to move real estate and reduce inventories,” says Don Cameron, a real estate investor who owns a franchise of We Buy Ugly Houses in South Florida. “Why wait 90 days before you can close on a home?”

    When will everyone wake up to the obvious,  if you are just an average American family, getting up and humping to work every day, playing by the rules, you lose, the financial investor class wins.  You don’t matter, your neighborhoods or neighbors (who are affected by foreclosure) don’t matter.  As long as there is a buck to be made, nothing else matters. As long as there is an ass to be saved( not yours- your banks) nothing else matters.  They tell you that we all lose if the banks fail. Well I say, if we have to fail then they should come along for the ride.

      BEWARE

    Predatory flipping is not allowed.  If the property selling price is increased by more than 20% the sellers must justify the increase.  A receipt for improvements( which can be falsified will do). I’m sure the FHA checks all of those.  Oh and, a sale must be an “arms-length transaction.”  Even harder to prove or check.   They did such a good job of tracking that during the boom, right?  Or, if all of that seems too daunting, just wait 95 days, and then execute the flip.

    Source: “Government Extends Waiver of Anti-Flipping Law, Allowing Homes to be Bought and then Sold in 90 Days,” McClatchy-Tribune Regional News (Dec. 29, 2011) and HUD.gov

    http://southfloridalawblog.com/2010/02/10/lemonade-courtesy-of-the-fha-90-day-anti-flipping-restriction-waived/

    http://www.trulia.com/blog/scott_newman/2010/01/fha_anti-flipping_laws_a_simple_explanation_and_how_it_effects_you

    http://www.fhaloanpros.com/2011/01/anti-flipping-suspension-likely-to-continue/

    FHA RULE IS CURRENTLY WAIVED

    http://blogs.palmbeachpost.com/realtime/2011/01/31/federal-anti-flipping-rule-waived-through-2011-to-keep-homes-selling/

     

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