Great news from HUD today regarding FHA rules about investment properties being purchased and resold for profit. Starting February 1st of this year, FHA will effectively waive the mandatory 90-day waiting period required by HUD in order for investors to purchase and resell specific foreclosed property. The rule will be on hold for 12 months.
This is excellent news. The 90-day rule was supposed to stamp out fraud but the reality of the situation was that it just frustrated buyers wanting to purchase quality rehabilitated property.
The rule change comes with a couple caveats:
1. All transactions must be arms-length between buyer and seller.
2. Transactions with resale prices of 20% above previous purchase price must have the value increase justified by rehab or market conditions.
Click here for the press release.
This will lubricate the marketplace mechanisms and help move quality property. Hurray!
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