FHA and Real Estate Flipping

It seems the US Federal Housing Administration (FHA) has caught up with the trend (or problem) of house flipping. Now, if you want to flip houses and use FHA financing, you'll be under much closer scrutiny.

The FHA actually discovered that some of their financing was going to housing deals that were outright fraud. That's not buying a property at a low price and fixing it up and selling it at a much higher price, but deals which included inflated appraisals and get-rich-quick schemes that had homes selling overnight for many times the original buying price.

Now if you want to use FHA financing, there are new rules. In essence, there is a 90 day "no flip" period, where if you do want to sell in that period, you have to meet a strict set of guidelines.

Given a housing market that has been driven higher and higher, in some cases by such strategies as house flipping, some tighter rules for FHA financing are not a bad idea.

Michael

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