House flippers get key extension from FHA
It was in the news this week that the Federal Housing Administration, the government entity that backs mortgages aimed at first-time homebuyers by lending institutions, had extended its 2009 waiver of an “anti-flipping” policy of not accepting new mortgages on a given property within 90 days of a past sale of the same property. The waiver has now been extended through the end of 2014.
For real estate investors in Central Pennsylvania, a lifeline has been thrown.
“House flippers” are folks who buy distressed properties and renovate them (with widely varying degrees of quality) within a relatively short period of time, finally reselling them at market prices for often-healthy profits. I’ve worked with many flippers over the years, both helping them buy and resell. At least in my own family of clients, the quality levels were excellent and it was fun for me to watch the transformation of a once-dilapidated house into something rather nice.
This is the spirit behind the FHA’s waiver of the 2003-era “anti-flipping” policy. In 2003, everyone remembers the craziness surrounding home sales. As a result of some high-profile issues with resold properties, the FHA began enforcing a 90-day rule that disallowed FHA-backed home buyers from closing on a property that had previously sold within 90 days – thus cutting out the quick-flippers from a key first-time buyer market.
However, by 2009 it had become clear that, on balance, flipped houses were working to right communities devastated by the foreclosure mess.
This view continues to be held today by the FHA, and I think the decision is a good one. The faster we can return properties to the market in habitable condition (nice, even) and allow new homeowners to move in and restore these homes to our neighborhoods, the better.
You can read the most recent official press release (from the last extension) on the waiver policy here.
Jeff Geoghan is vice president of marketing and communications for Coldwell Banker Select Professionals and Select Services, based in Lancaster City, with 10 offices in eight Central Pennsylvania counties. Jeff lives in East Petersburg where he also serves as mayor. Jeff has been actively involved in local government and business and has been used as a source by local, regional and national publications.