Breaking News! FHA 90 Day Rule, Lifted until Feb 1 – 2011

I do not have all the answers yet, but I do have a copy of the letter, with the Federal Housing Administration lifting the FHA 90 Day seasoning rule for one year.


1. To help facilitate the return of repaired and habitable properties to the market in a timely fashion, additional exemptions to the 90-day resale restriction period must be granted for the purchase of properties by investors.  This policy change will help to sell properties that may otherwise remain vacant for up to 90 days, while offering affordable hosing options to buyers wishing to use FHA-insured financing.

2. All other guidance concerning property flipping prohibition remains unchanged.

3. The most expeditious means of effectuating such additional exemptions is by waiving 203.37a(b)(2).

4. The above findings constitute good cause for the waiver, as required by 24 CFR 5.110.

5. A waiver of 203.37a(b)(2) will not violate any statutory requirements.

6. The waiver shall expire on year from February 1, 2010, unless otherwise extended or withdrawn by the Commissioner.  If FHA discovers that there is significant increase in mortgage defaults and mortgage insurance claims attributable to insured mortgages obtained through this waiver, the Commissioner may, at his discretion, withdraw this waiver immediately.


Section 203.37a(b)(2) of the FHA regulations (24 CFR 203.37a(b)(2)) is hereby waived for a period of one year from February 1, 2010, with regard to subsequent sales by purchasers, subject to the conditions of this waiver.

This is going to be a game changer.  I think we will see fraud increase substantially.  Investors snatch a property and sell it within 14 days for 150% of what they bought it for, doing next to no work.  I am surprised that no rumors surfaced, when the email came across my desk it was a complete shock to me!

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4 Responses to “ Breaking News! FHA 90 Day Rule, Lifted until Feb 1 – 2011 ”

  1. Susan says:

    If the new purchase price is more than 20% higher than the seller’s acquisition cost, improvements must be documented. I think this will go a long way toward making homes habitable and sold. While this rule is slated to stay in effect until 2-1-2011, there’s a unique opportunity in early 2010 with rates low and first-time homebuyer credits still in place.

  2. Mark says:

    This “exciting” time has turned out to be nothing more than exciting times for cash investors. Banks are still not recognizing the overturned 90 day rule. FHA buyers are still one lump sum behind the cash investor. Big load of BS if you ask me.

  3. kay reed says:

    so is it 90 days from purchase date or 90 days from recordation?

  4. Steve says:

    90 days from when it records. California is nice in that department where stuff records the same day most of the time.

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