The Federal Housing Administration is at odds with another government agency over its flipping rule.
In May, FHA temporarily waived a regulation that doesn’t allow government-insured loans to be used for the purchase of properties where the seller acquired the property within the past 90 days.
FHA said its decision was made to stimulate the “rehabilitation of foreclosed and abandoned homes,” though the waiver is not limited to foreclosed properties.
In the 2009 Mortgage Fraud Report “Year in Review” released today, the Federal Bureau of Investigation expressed its concerns about the waiver.
“The HUD FHA 90-day property flip rule designed to prevent illegal property flips of FHA-insured properties was waived by HUD through Jan. 31, 2011, for all sellers to move a stagnant real estate market and remove property off the books and records of banks,” the report said.
The bureau added, “Regulators and law enforcement officials continue to oppose this waiver as it contributes to an ever-increasing pool of potentially fraudulent property flipping schemes as it does not require the seller to have title to the property for a minimum of 90 days.”
The FBI explained that illegal property flips traditionally occur during a span of 90 days or less.
