Sperity Real Estate Ventures

  • Home
  • Services
  • Our Team
  • Blog
  • For Lease
    • Office
    • Religious Use
    • Residential
    • Restaurant
    • Retail
  • For Sale
    • Real Estate
    • Business
  • Contact Us

June 16, 2006 by Nathan Hughes

New regs for flipping properties

The FHA has addressed a lot of "malpractice" in the practice of flipping properties.  Reportedly, some investors are profitting well at the expense of the FHA.

But the FHA found that too many property flips using its insured
mortgage program involved outright fraud — hyped appraisals, shell
games where property flippers never actually took legal title to the
house before selling it for huge profits, sometimes overnight.

Link: Realty Times – Real Estate News and Advice.

To rein in such practices, FHA proposed — and last week adopted in final form — new restrictions. Specifically, FHA will now require that:

    * Only owners of record — listed as such in the local court house real estate recordations — may sell properties that will be financed using FHA insured loans.

    * Any resale of a property may not occur 90 or fewer days from the last sale to be eligible for FHA financing.

    * For resales that occur between 91 and 180 days where the new sales price exceeds the previous sale price by 100 percent or more, FHA will require additional documentation of the property’s true value before insuring the mortgage.

    * The agency may also require additional evidence of the accuracy of appraisals whenever properties are re-sold at high price gains within 12 months.

The FHA 90-day no-flip time restrictions will be waived when the sellers of properties to be financed are:

    * HUD itself, disposing of its REO (real estate owned) acquired property portfolio.

    * Sales of properties that were acquired by the sellers through an inheritance.

    * Fannie Mae, Freddie Mac or other federally-chartered financial institutions disposing of REO.

    * Local or state housing agencies.

    * Nonprofit organizations that have previous approvals to purchase HUD REO properties at a discount.

    * Properties located in a presidentially-declared disaster area, provided FHA has issued a formal announcement of eligibility for a specific disaster area.

Real estate investors, particularly those who specialize in rehabilitations of rundown structures in central city areas, had complained to HUD about possible negative impacts on their business activities stemming from the new rules. But HUD decided that banning most 90-day or under flips, and by scrutinizing flips between 91 and 180 days of acquisition where the price markup exceeded 100 percent, FHA should be able to protect itself against the worst abuses.

Investors with questions about the new regulations can call 1-800-CALL FHA for guidance. The rules are contained in HUD Mortgagee Letter 2006-14, issued June 8.

I, for one, am glad to see that the hucksters are being shaken out of the industry.  We need to uphold the ethical standards that so many of us take for granted.

Filed Under: Government Institutions, Investing

Receive Updates from Sperity

Browse Properties

  • Properties For Lease
  • Properties For Sale

Testimonials

“Instead of finding a big ticket location, Sperity listened to my needs and found what I was looking for. I was never waiting on them for anything. They handled both parts of the transaction, which was incredible.”

– Doug Mays, TSI Promotionals

 

“As a Muslim business, I really liked that he has a lot of ties in the religious community. He’s very involved with helping churches and community based programs find buildings.”

– Ashley M., Boastful Beauty

 

“I have looked at many businesses over the last few years and I want you to know that I appreciate your promptness, and especially appreciate the time you put into the package/presentation of your client’s business.  Very professional and well organized!”

-Francis C.

“[We have] the utmost respect for what they do. They always made us feel like they knew our priorities. They were very clear about getting down to the nuts and bolts of what our needs were.”

– J. Medaries, Spacebomb

 

Recent Posts

  • What Are Business Buyers Buying?
  • How to Maintain the Value of Your Commercial Property
  • The Challenges of Owning Multiple Commercial Properties
  • Is now the right time to sell your commercial real estate?
  • Expanding Estate Sales with Myk-Beth’s
  • Inside Out: How restaurants are restructuring their spaces during the pandemic.
  • What Are the Benefits of Commercial Real Estate?

Sperity

Sperity is a coined term, a combination of Inspire, Prosperity, and Integrity. We strive to bring all of those aspects to every interaction that we have, whether it is with a client, a customer, a competitor, or with anyone else.

We are a commercial real estate and business brokerage firm that works under a different model than anything else we've seen in the field. With the emphasis on treating our employees as a team, we incentivize excellent customer service and making sure that the whole company is working on every deal that we take on.


Learn More

Site Managed By Big Spoon Co. | PR & Marketing Agency

RECEIVE UPDATES FROM SPERITY

SPERITY REAL ESTATE VENTURES

Address:  215 East Grace Street, Suite 100, Richmond, VA 23219

Office: (804) 464-3898

Email us

© 2020 ALL RIGHTS RESERVED

Copyright © 2022 · Powered by 29doors

Copyright © 2022 · Executive Pro Theme on Genesis Framework · WordPress · Log in