The Federal Housing Administration (FHA) has waived its anti-flipping rule through the end of 2012. The FHA originally put the waiver into effect on February 1, 2010 and it was extended through 2011. And now, it will remain in effect for the rest of the year. But, what exactly does this mean for the Knoxville real estate market? And, what does it mean for people buying or selling homes in Knoxville?
So what exactly is the FHA anti-flipping rule?
The FHA anti-flipping rule does not allow homeowners, who have an FHA insured mortgage, to sell their homes any sooner than after 90 days of home ownership. The Federal Housing Administration, under the Department of Housing and Urban Development, instated this rule to prevent properties from being sold at artificially inflated prices by a seller, who purchased them for significantly less. With foreclosures being so prevalent, the rule was put into place to protect home buyers from artificially inflated prices.
What does this mean for people buying or selling their home in Knoxville?
It means that Knoxville home buyers and seller are not longer constrained by these regulations, at least through the end of the year. The waiver allows properties to sell as quickly as possible, hopefully allowing the real estate prices to stabilize, particularly in areas that have experience high foreclosure rates.
Are home buyers in Knoxville still protected from predatory property flipping?
The FHA still has strict regulations to ensure that Knoxville home buyers are protected against predatory property flipping. For example, there may be no link between the buyer and seller. In addition, if the sales price of the home exceeds an increase of 20% or more in sales price, the anti-flipping waiver will only be valid if the lender meets particular conditions and fully documents and justifies the increase in price. A full list of rule and restrictions can be found here.
How do you feel about the FHA Anti-Flipping waiver? Does it benefit people buying or selling their homes in Knoxville?