Financing-home loans, Real Estate, The Market

FHA – Seasoning requirements

HUD has published the final version of its predatory lending rule established to combat “flipping.” Flipping is the term used to describe the resale of a recently acquired property for an artificially inflated value. Under the new rule, recently flipped properties are not eligible for FHA mortgage insurance.

Some of the other features of the rule include:

  • Only the owner of record may sell a home to an individual who will get an FHA mortgage. It cannot involve the sale or assignment of a sales contract.
  • Resales occurring 90 days or fewer after the purchase of the property are not eligible for FHA insurance.
  • Resales occurring between 91 and 180 days after purchase will be eligible only if the lender obtains an additional independent appraisal based on a resale profit percentage threshold established by the FHA. Lenders may prove that the increased value of the property is due to rehabilitation.

In areas where flipping is a problem, HUD may require that lenders provide additional documentation to sup-port the value of the property. This would supersede the 91–180 day rule shown above.

Make sure you are working with an agent who is aware of these rules if you are seeking an FHA could end up in default if you find out too late in a transaction to purchase a home that meets this criteria.  Also verify any additional risk layering that your specific lender may use to protect themselves that adds additional requirements to the above noted.

Hope this helps!


4 thoughts on “FHA – Seasoning requirements

  1. Hey! I could have sworn I’ve been to this blog before but after reading through some of the post I realized it’s new to me.

    Anyways, I’m definitely delighted I found it and I’ll be book-marking and checking back often!

    1. Thank you…it has been 2 years since you wrote this email and I am just now seeing it…so sorry for that! I had a baby and dropped off the blogging hemisphere for a bit :). Between work and child rearing, I never got around to writing…I’m back though and hope you will still check in from time to time :).

  2. Hmm it looks like your blog ate my first comment (it was super
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    1. Hi…thank you! I stopped blogging for a bit due to my son being born and it “rocking my world” :). Getting back in to it now and just saw your comment! Sorry I was away and I hope you got in to blogging and are really liking it! I find it is a good way to get things out there that you are thinking about or think would be great info in a very casual setting. Warmest, Kristen

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