Lets start with a little context. In 2003 HUD (Department of Housing and Urban Development) instituted a rule that prohibited a buyer using an FHA mortgage to purchase a “flipped” home. That means a home that was purchased, usually updated/remodeled and put back on the market in less than 90 days. HUD instituted the regulation in an effort to stop or at least curtail some of the predatory lending practices that were happening at the time. But, due to the downturn in the market, which led to a rise in homeowners defaulting on their mortgages and an increase in foreclosed homes, HUD granted a temporary waiver of the property flipping rule in 2010.
Well, HUD issued a statement on December 9, 2014 stating that the waiver will end December 31, 2014. As the Arizona Association of Realtors® wrote in their article about the issue:
This deadline means that sales contracts executed after 11:59 pm on December 31, 2014 for properties that were previously acquired by the seller within 90 days will no longer be able to obtain a mortgage insured by the FHA.
How will this affect the local real estate market?
Right now FHA is as popular as conventional financing here in the Valley and we are currently one of the top cities in the nation for flippers. However, the popularity of FHA financing has more to do with the 5% down programs than anything else. As we start to see more and more conventional loan products with a less than 20% down payment requirement I think the need for FHA will lessen and it will not significantly affect the Scottsdale market.
Is it still a good time to buy?
With more and more flexible conventional loan products available and interest rates still at historic lows it is still a great time to buy.
For more details go to one of these links:
http://portal.hud.gov/hudportal/HUD?src=/FHAFAQ
http://www.gpo.gov/fdsys/pkg/FR-2012-11-29/pdf/2012-28918.pdf
http://www.ecfr.gov/cgi-bin/text-idx?rgn=div8&node=24:2.1.1.2.4.1.88.39.
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