Actual HUD Guidelines for Flips

 

I purchased a home in February and I had it fully remodeled and back on the market within 6 weeks.  Within 5 days of having it listed I had a couple offers, both of them FHA Loans.  I selected one of the offers.  Both parties knew about the FHA seasoning issues requiring a home to be owned for 90 days.  So we wrote the contract to close 2 weeks after the 90 days.

 

Now we are a week away from closing and the lender’s underwrites just came back and said that the contract cannot be written with the 90 day period.  They argue that a written offer cannot even be made until I own the home for 91 days. 

You can never argue with an underwriter, they know it all, but here are the actual HUD guidelines.  All rehabbers, flippers, and even wholesalers and agents should be familiar with this section.  This could make a big difference in your project planning and your exit strategy.

Note below that it states the “resale” cannot occur within 90 days following acquisition.  It says nothing about offer and or contract.  There are a lot of rumors floating around out there about this topic.  You should have the facts.

Checkout this website for additional information.

http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=985d26debd4e0186b7c646bec89691ae&rgn=div8&view=text&node=24:2.1.1.2.4.1.88.39&idno=24