Connecticut Real Estate Attorney Law Blog


HUD relaxes 90 day property seasoning rule for FHA loans!

HUD announced today January 15, 2010 that it is temporarily relaxing its 90 day seasoning rule which currently prohibits FHA loans for properties owned by the seller for less than 90 days.  See the HUD press release for more details.

According to the press release, "The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities."

The new rule will take effect February 1, 2010 and will be in place for one year.  To try to avoid the use of the FHA financing for flipping HUD is putting certain restrictions in place.  The new policy will only apply to sales meeting the following guidelines (from the HUD link above):

  • All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
  • In cases in which the sales price of the property is 20 percent or more above the seller's acquisition cost, the waiver will only apply if the lender meets specific conditions.
  • The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.
  • There is more detail on the HUD site which contains the specific requirements applicable.

    This change may be of major assistance to borrowers who want to but recently foreclosed property but cannot purchase directly from the bank.  It will also benefit  real estate investors (and some "flippers") since it allows FHA financing where it has been previously prohibited.  A resale can be for up to 20% more than the prior sale within the 90 day period.  If it is over 20% more, certain requirements must be met, including things such as verifying that improvements have been made in the property.

    This rule change or waiver should be of major interest to real estate agents marketing foreclosed property.


    About the author:  Attorney Begemann is a member of the Connecticut Bar and practices real estate and business law in Connecticut.  As an experienced real estate attorney he represents individuals and lenders in residential and commercial loan closings across Connecticut, including the purchase, sale and refinance of real estate.

    Attorney Paul H. Begemann, 2764 Whitney Avenue, Hamden, CT  06518

    Phone 203-230-8739                                       Fax 800-483-1904



    7 commentsPaul Begemann • January 15 2010 05:32PM


    Thanks for the details.  This sound like a win-win for investors and owner occupants as well.

    Posted by Renee L Norton (Keller Williams Realty Hoover) 6 months ago

    Thanks for sharing this information!

    Posted by Kristyn Grewell Edmond, OK Homes for Sale (CENTURY 21 Goodyear Green) 6 months ago

    Great article.  It is about time they relaxed something!

    Posted by Jim Startzman (Long and Foster Real Estate) 6 months ago

    Thanks for Posting!!


    Posted by iNet Real Estate Brokers, Inc. 6 months ago

    Thanks everybody for the comments, we shall see how this change plays out and how much it will help  move the REO's. 


    Posted by Paul Begemann (Attorney Paul H. Begemann) 6 months ago


    This is a great article, thanks for digging this one up.  I will be sharing this with many of clients, and I'm certain they will be relieved as this particular requirement has been very difficult for them to bear!

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