FHA just extending the suspension of the â€œanti-flippingâ€ rule for another year. This means that FHA (Federal Housing Administration) is now interested in helping low down payment borrowers, including investors who want to â€œfix upâ€ foreclosures and bank owned homes, and in turn help out local communities burdened by these foreclosures.
"This change in policy is temporary and will have very strict conditions and guidelines to assure that predatory practices are not allowed," Donovan said.
Previously FHA would not insure a mortgage on a house whose seller had owned it less than 90 days. The purpose of the anti-flipping rule is to eliminate the use of FHA loans to underwrite illegally-flipped homes, but it also hurt serious investors.
Investors will now be more willing to buy these homes, fix them up, and then re-sell them to buyers who can use the benefits from FHA Financing, which is a low down payment option for home buyers (3.5% down). Investors will now be able to use the FHA 203k â€œRehabâ€ Mortgage Program, a special financing program that allows for borrowing money to cover the cost of repairs and upgrades to a house, as well as the purchase price.
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