The Federal Housing Administration (FHA) has extended its 90-day “no flip” rule on recently rehabbed properties for another year. The ruling, which allows investors who acquire foreclosed properties at below-market value to be exempt from waiting the customary 90 days before reselling them, was set to expire at the end of January 2011. Vicki Bott, deputy assistant secretary for single-family housing at the FHA, said that first-time buyers have responded overwhelmingly to the opportunity to buy “turnkey” renovated homes with low down payments and they have performed well on their mortgage obligations.
The 90-day waiting period originally was put in place to protect FHA borrowers against predatory practices of flipping where properties were quickly resold at inflated prices to unsuspecting borrowers. Bott said that while the FHA is concerned about flipping in general, they have not seen any of the fraud problems, defaults and re-foreclosures that cost the agency millions in insurance payouts in earlier years.