FHA continues to allow flipping to improve home prices
Dec 30 2011 6:40PM
Sources report that in an effort to help stabilize housing prices and reduce the number of foreclosures, the Federal Housing Administration has extended a waiver of the anti-flipping regulations throughout the new year.
CNN reports that real estate investors who buy homes for cheap and then resell them for a profit will continue to allow flipping houses by suspending regulations that prevent the FHA from insuring mortgages for homes purchased and resold within a 90 day time period.
"This extension is intended to accelerate the resale of foreclosed properties in neighborhoods struggling to overcome the possible effects of abandonment and blight," said Carol Galante, acting commissioner of FHA.
The source says that low-income neighborhoods are most affected by foreclosures which lower the property value of surrounding homes and have attracted vandalism and other crime. Since house flippers aim to purchase low priced homes, by suspending regulations homes will be repaired while simultaneously improving neighborhood conditions.
The news source reports that FHA has insured over 42,000 loans for flipped homes since the waiver went into effect in February 2010 and expect that number to increase if mortgage rates remain stagnant in the new year.