Realtor Body Opposed to FHA Anti-Flipping
In a recently held meeting of California Association of Realtors disturbed by the 90 days anti-flipping rule of FHA passed a resolution by majority to submit a memorandum to the Commissioner opposing the anti-flipping rule.
The basic reason for the 90 day anti-flipping rule is on the basis of a mortgagee letter, written by the Department of Housing and Urban Development (HUD), which stated the facts about Property flipping. It is a situation by which the property is resold during a short period after its purchase by the seller enjoying huge profit by increasing the value of the property in an artificial manner and in the process the lender also colludes with the person, who does the appraisal of the value of the property.
Reacting to such instances coming into its knowledge FHA has attempted to thwart the efforts of persons involved in such malicious actions, who are on the look out of purchases made under FHA mortgage insurance program by the persons and make their offers attractive enough that the buyer feels like selling instead of retaining the property for the purpose it was purchased.
The basic principle behind FHA’s 90-day anti-flipping policy is that during the first 90 days there shall be no funds participation by FHA, which otherwise has the risk of getting misused. This step shall prevent the buyer paying more money to the seller besides preventing the misuse of FHA funds under mortgage Insurance program.
There are controversies expressed in favor and against this rule in the real estate market.