The Federal Housing Administration (FHA) is a Federal Agency within the United State Department of Housing and Urban Development.  Created in 1934 the FHA loan program gives lenders protection against borrower default in the form a Mortgage Insurance Premium which is paid for by the borrower in a combination of a "financed upfront MIP" (1.00% of the base loan amount) plus a "monthly MIP" paid as part of the borrower's monthly payment (an annual 1.15% of the base loan amount divided by 12 for 30 year loans with LTVs greater than 95% and an annual 1.10% of the base loan amount divided by 12 for 30 year loans with LTVs equal or less than 95%; 0.50% of the base loan amount divided by 12 for 15 year loans with LTVs greater than 90% and 0.20% of the base loan amount divided by 12 with LTVs equal or less than 90%).  FHA does not lend money.  FHA is considered an insurance program. 

FHA has extended the temporary property flipping waiver that allows lenders and the property disposition firms they hire (or with whom they are affiliated) to sell properties on which they’ve foreclosed without regard to FHA’s 90-day seasoning requirement.  Individuals or entities that purchase foreclosed homes are not exempt from the 90-day seasoning requirement. When the property seller is not exempt from FHA’s seasoning requirement, the borrowers may not execute the purchase agreement before the 91st day after the seller acquired the property.

The waiver applies to all sales of properties which have been owned less than 90 days (counted from the date of settlement on the Seller’s acquisition of the property) that meet the following criteria:

Must be an arms length transaction with no identity of interest between buyer and seller or other parties participating in the sales transaction. To make this determination the following applicable steps should be performed:

    • Verify that Seller is in title as indicated on the Appraisal and no apparent family or business relationship exists between the parties to the loan or sales agreement.
    • LLCs, corporations or trusts as sellers must have been established and operated in accordance with applicable State and Federal law. Lenders must document the validity of the seller. Business licenses, State Department of Corporations status, and Attorney Opinions are examples of acceptable documentation.
    • No pattern of previous flipping exists such as multiple transfers of title within a 12 month timeframe as indicated on the chain of title on the Appraisal .The appraisal is required to show a 3 year history of ownership.
    • Document that property was marketed openly and fairly through an MLS, an auction, For Sale by Owner or developer. Note: sales contracts which have been assigned to the current buyer are not allowed.
  • The increase in value must be supported by the Appraiser with supporting comments and documentation included as follows:
    • Appraiser must indicate the seller completed legitimate renovation, repair and rehabilitation work on the subject property to substantiate the increase in value.
    • If the work was not performed, appraiser must provide appropriate explanation of the increase in value since prior title transfer. This should include an analysis of the market difference occurring between distressed sales and typical arms-length market sales.

"If the party in question executes the mortgage, deed of trust, or security deed only for such reasons, he or she is not considered a borrower for FHA purposes, and therefore need not sign the loan application or be considered in credit underwriting."

All Borrowers must provide a picture identification and have a Social Security Number.  Citizenship of the United States is not required for eligibility.  FHA will insure mortgages made to Lawful Permanent Resident Aliens with documented evidence of permanent residency as issued by the Bureau of Citizenship and Immigration Services (BCIS) (formerly the Immigration and Naturalization Service) within the Department of  Homeland Security and to Non-Permanent Resident Aliens provided that the property will be the borrower's principal residence, the borrower has a valid SSN (Social Security Number), and the borrower is eligible to work in the U.S. as evidenced by an Employment Authorization Document (EAD) issued by BCIS.  If the authorization for temporary residency status will expire within one year and a prior history of residency status renewals exists, the lender may assume continuation will be granted.  If there are no prior renewals, the lender must determined the likelihood of renewal, based on information from the BCIS.  Non-U.S. Citizens with no lawful residency in the U.S. are not eligible for FHA-insured mortgages..