2325 E. Camelback Road #100
Phoenix, AZ 85016
Arizona's #1 FHA Lender (2014)
NMLS #221602 | FIMC NMLS #2289
FHA financing is typically not permitted for a purchase transaction if the current owner has owned the property for less than 90 days, unless the transaction fits into one of the following exemptions:
• HUD REO sale
• Government agency REO sale
• Sale by non-profit agency approved to purchase HUD REO’s at a discount with resale restrictions
• Sale of inherited property
• Sale of property acquired by an employer or relocation company in connection with an employee relocation
• Sale by state or federally chartered institutions
• Sale by GSE’s
• Sale by local and state government agencies
• Sale of property located in federal disaster areas, as approved by HUD through issuance of a notice
• Builder selling a newly built home or building a home for a borrower
With the waiver, properties that have been acquired by individuals or entities not meeting the above criteria are eligible to sell a property with FHA financing, with no 90 day waiting period required. There are, however, restrictions on the waiver, which are:
• All transactions must be arms-length with no identity of interest between borrower and seller or any other parties participating in the transaction. Note: FHA defines “identity of interest” as “a sales transaction between parties with family relationships or business relationships.”
• The following list must be used to determine that no inappropriate collusion or agreements exist between parties to the sales transaction:
o Seller holds title to the property.
o If the seller is an LLC, corporation or trust, the entity was established and is operated in accordance with applicable state and federal laws.
o There is no pattern of previous flipping activity for the subject property as evidenced by multiple title transfers within the most recent 12 months constituting previous property flipping activity.
o The property was marketed via MLS, auction, for sale by owner offering or developer marketing – “Sales contacts that refer to an ‘assignment of contract of sale,’ which represents a special agreement between seller and buyer may be a red flag”.
• If the resale price is 20% or more above the price paid by the current owner, the following additional guidelines apply:
o A second FHA appraisal is required. The fee may not be paid by the borrower. Note that this 2nd appraisal must not be logged into FHA Connection.
o Evidence the seller has completed sufficient legitimate renovation, repair, and rehabilitation work to substantiate the increase in value (contracts and paid receipts and/or a second appraisal indicating repairs completed and the value of those repairs). If no or minimal repairs were completed, the appraiser must indicate the reason for increase in value since seller acquisition.
o A property inspection completed by an inspector having neither an interest in the property or a relationship with the seller must be ordered by Nova.
o The property inspector must be paid by the lender, but the borrower may reimburse the lender for the inspection.
o The inspector may not pay anyone for referral of the inspection and may not receive compensation for referring or recommending contractors to complete recommended repairs.
o The borrower must receive a copy of the inspection report prior to closing.
o The inspection must include all of the following elements:
Property structure, including foundation, floor, ceiling, walls and roof
Exterior, including siding, doors, windows, appurtenant structures such as decks and balconies, walkways and driveways
Inspection of roofing, plumbing, electrical, heating and air conditioning systems
Inspection of insulation, ventilation systems, fireplaces and solid-fuel-burning appliances such as wood stoves.