A proposed rule appearing in the Sept. 5, 2001 Federal Register allowed for exceptions to the property flipping restrictions in cases where there are justifiable circumstances for the quick and profitable resale of a recently acquired property.
However, that provision was left out of the final rule.
In a July 7 letter to John C. Weicher, assistant secretary for housing and FHA commissioner, Rayburn expressed concern over the unintended impact of the new rule and suggested changes that would reduce the rule’s impact on legitimate business transactions without diluting its effectiveness.
“A legitimate seller should be able to provide a lender with complete documentation of their cost of acquiring the home, any repairs that have been made and all expenses incurred in conjunction with the home, including sales costs,” Rayburn wrote.
“Additional documentation could be required to verify that the home is sound and that the price of the re-sale is in line with the market for that home,” he said.
NAHB is continuing to work with HUD to resolve this issue.
For further information, e-mail Bill Renner, NAHB’s director of single-family finance, or call him at 800-368-5242 x8597.
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