Danny Salas

Archive for September 27th, 2009

90-Day “Flipping Rule” Fannie/Freddie/and FHA

Understanding the 90 Day "Flipping" Rule

What’s “Flipping?”

Here’s the deal…Different banks have different contracts with Fannie Mae and Freddie Mac.  That’s why Bank of America can’t do some loans that Wells Fargo can.  Period!  One interesting opportunity, that we’re seeing a lot of currently, is buying a property that has been foreclosed on, for an extremely low price, then turning around, fixing it up, and selling it for a significant profit.  Otherwise known as, “flipping,” in the industry.

The 90 Day Rule

Here’s a general rule.  When someone buys a home for a certain price, and tries to immediately sell it for more (immediately, here, means 90 days), banks have rules.  One of those rules is that you may not “flip” the property.  The key word, here, is “banks.”  Fannie Mae and Freddie Mac DON’T CARE if you turn and sell the property, immediately.  FHA Does!

Want To Turn An Immediate Profit?

So, what do people do if they’re trying to turn a quick profit?  Well, work with me, of course!  Here’s why!

What’s The Deal?

Fannie Mae and Freddie Mac’s guidelines are clear…you may purchase a home, fix it up, and sell it, promptly.  Even for a profit.  So, why don’t many banks allow a buyer to come in and purchase a “flipper” within the 90 days?  Let’s talk about FHA’s guidelines.

FHA “Flipping” Guidelines

 If you care, read about them, here!

Hey Investor, You Can Still Flip!

So,as I stated above, Fannie Mae and Freddie Mac have different contracts with different banks.  So, if Fannie Mae doesn’t care if you “flip” a property and Freddie Mac doesn’t care if you “flip” a property, why don’t banks let you?

Many banks interpret FHA’s guidelines as their guidelines, regarding flipping. But some banks’ legal departments understand these guidelines…particularly.  So, guess who knows which banks interpret Fannie/Freddie Guidelines regarding “flipping,” as opposed to FHA’s guidelines regarding “flipping?”  I DO!

So, if your listed home doesn’t meet FHA’s criteria, regarding “flipping,” but does Fannie/Freddie’s criteria…and you want to “flip” that home, immediately, for a profit…call me!  Access has contracts with banks that allow it!

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