HUD Flip Guidelines

    HUD Guidelines to Flip Properties

            If the re-sale date (date of the fully executed sales contract that will result in a FHA loan) is 91 days to 180 days following the date the seller acquired the property, a copy of the title binder from the purchase transaction is required and documentation showing the seller?s purchase price. If the seller?s HUD-1 indicates that the sales price for the current purchase transaction is 100% or more greater that the sellers purchase price, additional documentation is required. This documentation includes the following: 1) A second full appraisal supporting the value from a FHA Roster Appraiser. The value used for the transaction must be the lower value of the two appraisals. (Required) FHA will not accept an AVM. (Note: The borrower can not be charged for the second appraisal. Either the seller of the lender must pay for the second appraisal.)  Optional- Documentation supporting the increase in value was the result of renovation of the subject property (second appraisal is still required.) Appraisal must not the improvements/rehabilitation(s) that were made. Renovation costs are documented with one of the following: executed construction contract, lien waivers, cancelled checks with corresponding paid receipts for valid construction expenses. Valid construction expenses include: materials, architectural fees, supplies, labor, liability insurance on laborers, installation costs for water, sewer, well, ect., permits, non-recurring costs of obtaining financing including origination fees, discount points, title search, recording fees. This documentation should be scanned under the CRDTPKG doc type (separator sheet).

     

    Example: A fully executed sales contract is dated May 23, 2003, with a sales price of $80,000. The seller acquired the property on January 17, 2003 for $40,000. As only 127 days have elapsed and the buyer?s purchase price is 100% greater than the seller?s purchase price, a second full appraisal supporting the value is required from an FHA Roster Appraiser.  (Notes: Note that any subsequent re-sale of excluded properties must meet the requirements stated above. This policy does not apply when a builder is selling a newly built home or is building a home for a borrower who is using FHA financing. FHA reserves the right to implement future restrictions/requirements on re-sales within 12 months of the seller acquiring the property on either a nationwide or regional basis.

     

    Contact Us Now

    Any questions, comments, or feedback

    Disclaimer: By entering your information and clicking "Continue" you agree to our Terms of Use and Privacy Policy and that you may be contacted by phone, text message and email about your inquiry.