David Saks: FHA's 90 Day Flip Waiver Flops : Good or Bad ?

David Saks - Real Estate Broker - The Real Estate Mart of Tennessee, Inc. - 4040 North Watkins-Suite #4 - Memphis, Tennessee 38127 - Phone (901) 357-4663

FHA's 90 Day Flip Waiver Flops : Good or Bad ?


Was this a good idea? Did somebody make a mistake? Is the flood gate wide open for bad deals? The FHA 90-day waiting period, created in 2003 to retort predatory lending and house flipping has been given a reprieve, on the heels of the worst housing crises since Moses and the Hebrews had to flee Egypt and wandered in the wilderness for forty years without a home !!!

The original ruling , "FR-4615 Prohibition of Property Flipping in HUD's Single Family Mortgage Insurance Programs," also required lenders to obtain a second appraisal on properties that they flipped or resoldflipped within 91 and 180 days if the resale price exceeded the original sale price by 100%.

Did that mean that if the flipped price was only 99% in excess of the original purchase price that the red flag was lowered and it was ok to sell the house the investor purchased for 50k for 99k without raising an eyebrow, without even replacing a doorknob?


What kind of affect will this have on the housing market?

There are nearly 19 million vacant homes in the United States at this time according to the United States Census Bureau. The Federal Housing Administration believes that,"...a temporary relaxation of it's eligible property requirements...can help address the mortgage crises."

Will somebody please tell me how?

David Saks

Time&Temp Memphis

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Comment balloon 6 commentsDavid Saks • June 17 2008 11:02PM


Darling David: It is a good thing. We need to sell all the properties that we can. When someone rehabs, they make money to spend. When someone is willing to buy something that has been rehabbed, they will spend money (for new furniture, etc.)

RELAXATION is a good thing. Not a bad thing.

I still think we are soul mates, Memphis Man.

Posted by Janet Guilbault, San Francisco Bay Area Direct Mortgage Lender (Platinum Home Mortgage Company) over 12 years ago

Whew, Janet. I'm sweating this one. I know the brink was set high to allow lawful rehab in an attempt to discourage the shysters from scamming the buyer. I just have a funny feeling that FHA put a bug under the rug.  When lenders rehab the properties before they put them up for sale they'll bump their prices up, way up. More quick flips. It's certain it'll reduce the inventory, and also certain that more lenders will flounder. I might have to play Jerry Lee Lewis and Elvis songs for a living and stick a tip jar next to the candelabra. ps...I'm blushing...


Posted by David Saks ((retired)) over 12 years ago

Confused. Why when inventories are reduced do more banks flounder? Please explain.

Do not blush. I am a Southern woman only disguised as a California woman.

 Love that white grand piano. And oh, those plants. I have to live with many, many plants. They help me think (and breathe).

Posted by Janet Guilbault, San Francisco Bay Area Direct Mortgage Lender (Platinum Home Mortgage Company) over 12 years ago

It takes money to rehab and reduce the inventories. And if they can't sell the rehab they don't make money. Just a thought. Maybe my math's skewed. I called the crash ten years ago when the assessors offices nationwide doubled the values of homes everywhere to tap the equity for county revenues. It was easier to add value to the house than have to deal with the grunts and whines of homeowners opposed to property tax increases. Crooked mess. It opened the floodgate for refinancing because it gave everybody a little more equity to play with. Look at all the negams now. It's time to pay the piper, or the fiddler to play.


I might add...you're a beautiful Southern woman, at that.

Posted by David Saks ((retired)) over 12 years ago

I have a house that we paid $56k for last month from the bank (post foreclosure).  We have done typical renovations such as paint, carpet, electrical, heat/air, etc.  We had the house ready for resale within 2 weeks and found a willing buyer at $90k within 4 weeks.  Of course with the costs of repairs, commissions, seller paid closing costs, etc. we will only net about $15,000.  However, I am not the bank who foreclosed, so this rule does not help me.  My only solution is to rent to them for two months which is very risky for me as they could destroy the house and then walk from the deal.  I wish this rule applied for me!  I am not a crook, just an investor who is affected by these rules.

Posted by Neil about 12 years ago

Neil, I'm not aware of the date of enactment of the new ruling in relation to your closing, so I wouldn't know if the rule would apply in your case or not.

The original prohibition was published in the Federal Register in 2003.

Contact an FHA counselor, and an attorney if you need legal advice.

Hope everything works out satisfactorily. Thanks for commenting.

Posted by David Saks ((retired)) about 12 years ago

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