In our market, many of the properties have been purchased by investors and are resold within a short time period. Therefore, it is important to know the “flipping” rules for different programs. Below is a quick summary. Please feel free to contact us with any questions you have regarding these rules.
FHA
When the Resale is within 90 Days:
- Ineligible for FHA financing
When the Resale is between 91 days and 180 Days:
- Obtain 2nd appraisal if resold between 91 to 180 days after acquisition
- Obtain 2nd appraisal if resale price is double price paid by seller (or more)
- If there is more than 5% difference in the values, the lower value must be used
- Borrower cannot pay for 2nd appraisal
Exceptions to FHA Flipping Rules:
- Property purchased by an employer or relocation company due to relocation of an employee
- Sales by builders selling a new home
- HUD Resales – REO program
- Sales of properties by local or state governments
- Sales by other government agencies (i.e., IRS, court-ordered, DEA, etc.)
- Sales of non-profit agencies approved to purchase HUD properties
- Sales of Inheritance properties
- Sales of properties by federally chartered financial institutions
- Sales of properties by GSE’s
- Sales of properties in federally declared disaster areas
NOTE: Landmark Mortgage Planners will be required to obtain a 12-month chain of title to document time restrictions above.
VA
- No Flipping Rules – Overlays may apply or at Underwriter’s discretion
USDA
- We would be required to document that any recently sold property’s value is strongly supported when a significant increase between sale and purchase occurs.
- We would be required to document that the appraisal value is supported with validated comps.
Fannie Mae
- No Flipping Rules – Overlays may apply or at Underwriter’s discretion
Freddie Mac
- No Flipping Rules – Overlays may apply or at Underwriter’s discretion