Resale´s Occurring 90 Days or Less Following Acquisition

If the owner sells a property within 90 days after the date of acquisition, that property is not eligible security for a mortgage insured by FHA unless it falls within one of the exceptions to the time restrictions on resales as noted below.  FHA defines the seller's date of acquisition as the date of settlement on the seller's purchase of that property. The resale date is the date of execution of the sales contract by the buyer that will result in a mortgage to be insured by FHA (meaning the earliest date on the PA).

As an example, a property acquired by the seller is not eligible for a mortgage to be insured for the buyer unless the seller has owned that property for at least 90 days. The seller must also be the owner of record.

If it is determined that the PA is signed within the 90 days, then the PA must be completely re-written and re-signed and re-dated by the sellers and the buyers and this must be done prior to clearing the loan to close.  An addendum to the initial PA is not sufficient.  The date of the appraisal does not have an impact on this.

Once the 90 days have passed, and the resale is between 91 and 180 days, the lender is required to obtain a second appraisal made by another FHA approved appraiser if the resale price is 100 percent or more over the price paid by the seller when the property was acquired.  This also applies to Bank owned homes, in that if the bank takes the property back for "x" amount (unpaid balance) and the new appraised value is 100% greater than the unpaid balance, a second appraisal is required.

Exceptions to 90-day Restriction

The following sales are exempt from the time restrictions:

•	Sales by HUD of its Real Estate Owned
•	Sales by other United States Government agencies of single family properties pursuant to programs operated by these agencies.
•	Sales of properties by nonprofits approved to purchase HUD-owned single-family properties at a discount with resale restrictions.
•	Sales of properties that are acquired by the sellers by inheritance.
•	Sales of properties purchased by employers or relocation agencies in connection with relocations of employees.
•	Sales of properties by state and federally charted financial institutions and Government Sponsored Enterprises.
•	Sales of properties by local and state government agencies.
•	Upon FHA's announcement of eligibility in a notice, sales of properties located in areas designated by the President as federal disaster areas, will be exempt from the restrictions of the property-flipping rule. The notice will specify how long the exception will be in effect and the specific disaster area affected.

Inapplicability of 90-Day Restriction to New Construction

The 90-Day restrictions are not applicable to a builder selling a newly built home or building a home for a homebuyer wishing to use FHA-insured financing.  written by Derek J Parent of South Wind Financial in Las Vegas