WASHINGTON (CN) – The Federal Housing Administration will extend a waiver on its anti-flipping regulations until Dec. 31, 2012.
“This extension is intended to accelerate the resale of foreclosed properties in neighborhoods struggling to overcome the possible effects of abandonment and blight,” said Acting FHA Commissioner Carol J. Galante.
Under regulations adopted in 2003 the FHA does not insure mortgages on houses sold within 90 days of the re-seller’s acquisition, unless that seller meets certain exemptions such as being a government-sponsored entity or nonprofit organization approved to purchase homes owned by the Department of Housing and Urban Development.
The FHA said it adopted those regulations to protect consumers against collusion by mortgage lenders and appraisers to inflate the price of properties to which a speculative buyer has made only superficial improvements, if any.
Since the original waiver took effect in February 2010, the FHA said, it has insured nearly 42,000 mortgages worth more than $7 billion on properties resold within 90 days of acquisition.
The FHA said it had research showing that the regulations discouraged sellers from accepting FHA-backed buyers at a time when it needs to do everything possible to promote recovery in the housing market.