On Friday, HUD announced that they would temporarily waive the 90 day seasoning rule for FHA buyers. This is the link to the waiver from the HUD website. http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf The waiver goes in to effect on February 1, 2010 for one year.
The 90 day seasoning rule had prevented a buyer from purchasing a home with an FHA loan if the seller had not owned the property for at least 90 days prior to the buyer's purchase contract being executed. There were exceptions for Bank owned properties, relocation companies and inherited properties.
The biggest benefit will be for the "fix and flip" investors. They will now be able to market their properties sooner to FHA buyers who are currently the largest segment of the market. HUD has determined (finally!) that these investors are good for the market.Of course, there are restrictions. For example, an increase in sales price from the seller to the buyer of more than 20% will require a second appraisal and documentation of the improvements that were done to justify the increase in sales price. Also, the transaction must be an arms length transaction.
Please call, email or stay tuned for more information. The announcement was just made on Friday. There are not lender specific guidelines yet.
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