The Federal Housing Administration (FHA) has waived its anti-flipping rule through the end of 2014. The FHA originally put the waiver into effect on February 1, 2010 and last year, it was extended through 2012. The FHA anti-flipping waiver is great news for the Knoxville real estate market.
The FHA anti-flipping rule requires homeowners with FHA mortgages to wait at least 90 days before selling their home. The Federal Housing Administration instated anti-flipping this rule to prevent properties from being sold at artificially inflated prices. Prior to the rule, sellers would purchase homes at dirt cheap prices, then turn around and sell the home for significantly more, without making an major improvements to the property. Sellers were able to pull of the scheme by using inflated appraisals to vindicate the price and with the assistance of corrupt individuals in the real estate business.
The FHA does have certain requirements that must be met for each transaction. All transactions must be completed “at arms length.” This means that there must be no obvious connection between the buyer and the seller. If the property is sold for more than 20% of the previous purchase price, documentation must be provided to prove the increase in price. Also, if the price increases by 20% or more, inspections of all major structure and systems of the home must be completed and presented to the buyer prior to closing.
The extension of the waiver is great news for the Knoxville real estate market. It means that Knoxville home buyers and seller are not longer constrained by these regulations, at least through the end of the 2014. The waiver allows Knoxville properties to sell as quickly as possible, hopefully allowing the real estate prices to continue to stabilize.
If you’re a Knoxville homeowner facing foreclosure, it is important to know that you have options. My team and I specialize in helping Knoxville homeowners avoid foreclosure, so please do not hesitate to give us a call to day at 865-696-9002 or via email at [email protected]. Also, be sure to check out our Knoxville Short Sale and Foreclosure Resource Page.