FHA Book

Anti-Flipping Rule Suspended

On June 2, 2003 the FHA began enforcing a rule that it would not insure mortgages for houses that had been sold more than once in ninety days, effectively preventing flippers from using FHA Loans to finance their enterprises. The justification for this rule was to prevent people from using FHA Loans to finance houses that were “fixed up” in a short period of time and then selling the property for a grossly inflated price, as well as stopping genuine scam artists who would repeatedly sell the house to fake buyers. A May 7, 2003 article from the Realty Times does an excellent job describing the details.

CNNMoney.com reports today that the rule has been suspended for one year. The decision is based on the enormous number of foreclosed properties that are sitting empty and destroying market values. Hopefully honest flippers will take advantage of this suspension of the guideline and help revitalize many distressed neighborhoods.