On Friday, January 15th, 2010, the Department of Housing and Urban Development (HUD) announced that they are lifting the 90 days seasoning rule in order to “stabilize home values and improve conditions in communities where foreclosure activity is high. The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner.”
To protect FHA borrowers against predatory practices of “flipping” where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general conditions:
- All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
- In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions.
- The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.
The HUD press release can be read in it’s entirety by clicking on the following link: http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-011
The waiver of requirements can be read here: http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf
