If you have ever been interested in flipping a home, you are likely familiar with the anti-flipping rule instituted by the Federal Housing Administration. However, the rule was recently overturned. Potential buyers can now seek out a Federal Housing Administration-insured home loan to use to purchase a foreclosed home.
The anti-flipping rule was established in an attempt to decrease the amount of mortgage fraud committed. However, it ended up hurting the buyers who wanted to buy a foreclosed home, and needed an FHA-insured mortgage. With the destruction of the rule, these buyers now have the ability to get their hands on the foreclosed homes they desire.
Many lenders are pondering how they will choose to interpret the waiver. While it will allow for faster foreclosed home sales, most will not choose to abide by it. There are a few restrictions associated with the waiver that potential buyers should be aware of. For one, the buyer and seller cannot have a close relationship. Additionally, the buyer cannot agree to spend more than 20% of the price paid by the investor without submitting the sale to further security measures. This is to make sure that inflation has not affected the value.
One fortunate outcome of the change is that fraud levels are not expected to experience an increase due to the anti-flipping waiver. If you would like to learn more about the current changes affecting the real estate world, please contact The Barr Team, located in Irvine! Our agents specialize in short sale negotiations, and residential listings in Southern California. We have been fulfilling the real estate needs of Californians for nearly 30 years! Allow us to share some of our extensive real estate industry knowledge with you, today!