The mandatory 90-day waiting period instituted in 2003 by the Federal Housing Administration (FHA) on the sale of REO properties is being lifted. The waiting period was originally designed to reduce the number of properties in foreclosure that were being “flipped” by investors, but is now seen as an additional hurdle in the process of clearing the growing number of foreclosures from the market.
Agents should be aware that many REO properties do not meet FHA guidelines, however, and so properties that are in foreclosure may need to be rehabilitated prior to being sold to an FHA borrower.
The process of flipping homes gained popularity over the last few years. Investors would purchased foreclosed or distressed properties and then re-sell them to new buyers. The timeline for the re-sale is the subject of the 90-day rule.
