FHA allows flipping of houses until end of 2012: Episode #181

Todd: Hello and welcome to Todd Miller TV, joined here today with Oana. Thank you very much for being on my video blog again.
Oana: you’re welcome.
Todd: Almost a regular guest.
Oana: Yes.
Todd: Well, in-case you didn’t know. Years ago, about 5 or 6 years ago, we did a radio show together.
Oana: Yes.
Todd: Called “Talk about Houses” we did it for a year. It was a live Real Estate talk show here in Las Vegas and.. So anyway, Anti-flipping rule. So the rule used to be 90 days after the sale, the FHA would not allow somebody to buy the house and get FHA financing. Well, they extended the rule. They made a rule that said “Well, if it’s a foreclosed home, so it’s a bank owned home of a flip form a foreclosure; or if it’s a HUD home, they’ll waive the rule with some limitations.” There’s some values, limits and you have to get your appraisals, but basically this allows an FHA buyer to buy a house that’s a bank owned home.
Oana: Right.
Todd: And they extended this ’til the end of 2012. So, tell me what you think this impact? ’cause you have a lot of REO listings. How do you think this impacts the consumer out there who’s only can qualify for FHA Loan? And what happens at the end of the year, if they don’t extend this rule, what’s gonna happen if someone waits until 2013 to buy a house and gets an FHA loan?
Oana: First of all, this helps the consumer because it takes the guess work out of, “well can I buy this home, or can’t I buy this home? I’m qualified for an FHA Loan but does this house qualify?” So, it takes some of that guess work out of it. Because let’s face it, when the consumer goes out they’re looking to fall in-love with a house, they’re not looking for the pedigree of the house.
Todd: Right.
Oana: So, it takes some of that guess work out which is wonderful. What happens in 2013, you know, the election year and everything, it really depends on the inventory levels I think.
Todd: Okay.
Oana: I think if the market is still dominated by bank owned homes, by foreclosures and that sort of thing, it only makes sense that it’s going to be extended. The idea is not to all of the sudden have all these homes in the market that no one can buy. It really limits the market if you can’t have FHA buyers participate and it really almost anti-American to not allow everybody who can qualify for a home to buy a home. With election and with our National pride being home ownership, I can’t imagine that if the need is still out there that this will not be continued.
Todd: Okay. Obviously, the rule’s to prevent fraud.
Oana: Okay.
Todd: Because there/ with only having to put 3 or 3 and a half percent down on a house, there’s this potential that someone can buy a house way over way over by what it’s really worth by flipping it. And then whoever that sold it was can sort of make out a bunch of cash. And the person who put the 3 and half percent down could just walk on the house. That’s what they’re trying to avoid.
Oana: Right. And you know, Lending practices have changed a lot since a lot of that certain thing have went on. Lenders are bunch tighter as far as how many Loans they’re going to allow per person. I mean, it used to be that if you could file the ?>Palmera advan<? you could get a loan and maybe that wasn’t always necessary either.
Todd: Right.
Oana: But now it’s gotten much much tighter. We’re seeing people with 800 credit scores having to jump through hoops to buy a home.
Todd: Yeah.
Oana: So, Lending process have changed and I don’t think that that’s going to be and impact.
Todd: Okay. So, on your listings, under a hundred thousand, most of those are probably bought cash, right?
Oana: Correct!
Todd: Above a hundred or 130 or whatever, what percentage of offers do you see coming in for FHA?
Oana: Quite a few actually. Quite a few. A lot more than you think. And a lot of the reason is because while the economy is rough and people are struggling out there as far as being un-employed or under-employed, there’s still a significant portion of people that make enough money to purchase a home. And so, we’re seeing probably I would say about 40% FHA. Which is a lot ’cause we’re probably seeing just under that as conventional.
Todd: Okay. Are there any Loan programs you know of where you could only put 3% down?
Oana: You know, the Homepath program, well it’s not 3%, it is a really good program and they’ve got some cool things going on with that . That’s another program that it’s only for Fanni Mae owned homes, but again, it’s lesser the down payment, no appraisal, other things going on with that; which would be impacted by properties that are going to be flipped as well. These are only properties that are sold by Fanni Mae, so they’re not flip properties, but they could be flipped once somebody buys them.
Todd: Okay. Cool. Alright. So that was it, Thank you very much.
Oana: You’re welcome.
Todd: That was the update, FHA Anti-flip rule extended ’til 2012 which means you can use FHA loan to buy a foreclosed property within 90 days. Anyway, that was my update, hope to see you on another video. Thanks.