Tuesday, November 21, 2017
Business

The Nation's Housing: FHA extends break for house 'flippers'

RECOMMENDED READING


House 'flippers' get a break from FHA

WASHINGTON — The Federal Housing Administration has decided to extend its rule permitting loans on quick "flips" of renovated houses beyond the scheduled Dec. 31 expiration deadline. The policy is widely considered one of the key federal government moves that has encouraged private investors in large numbers — often mom and pop, small-scale operations — to buy foreclosed and deteriorating houses from lenders, then repair them and resell within short periods of time.

Since the plan was first put into place by the Obama administration in February 2010, more than 65,000 renovated homes have been financed using more than $11 billion in FHA-backed loans, according to federal officials. Roughly 23,000 of these properties were acquired and resold with FHA loans within the past year alone.

The idea, according to acting FHA Commissioner Carol J. Galante, is to help "stabilize real estate prices as well as neighborhoods and communities where foreclosure activity has been high" by making it easier for investors to buy, fix up and sell run-down homes that add to urban blight and depress values. The primary purchasers of the renovated properties are first-time, moderate-income families who might otherwise be frozen out of the market because they don't have the down-payment cash required for a conventional loan. FHA down payments can be as low as 3.5 percent.

The Obama administration's initiative in 2010 represented a reversal of earlier restrictions on flips first imposed in 2003. After scandals in Los Angeles, New York, Baltimore, the District of Columbia and other large cities over widespread fraudulent flips — where houses sometimes resold for double their previous price within days or even hours — FHA stopped insuring loans on houses whose sellers had owned them for less than 90 days.

Paul Wylie, a Los Angeles-area investor active in renovating distressed properties, welcomed the extension of the FHA policy because "it allows predominantly first-time buyers to compete with cash buyers, investors and others" for houses at affordable prices that have been professionally repaired.

FHA's policy requires property sellers to comply with a detailed list of standards. Among the most prominent:

• You can't play games on ownership. All transactions must be arm's-length with "no identity of interest between the buyer and seller or other parties" involved in the sale. You can't buy a house from your uncle at a bargain price, hire your brother to do a few quick repairs to it, then resell it for a huge profit to an unsophisticated buyer, supported by a hyped-up appraisal signed by a friend or partner.

• The seller of the rehabilitated house must have clear legal title to it. This may sound elementary, but some flippers during the late 1990s never bothered to acquire title and record it. They took over the property one day, slapped a little paint on the outside and sold it the following day.

• If the selling price is 20 percent higher than what the house cost the seller, a second appraisal, conducted by a member of FHA's panel of approved appraisers, is mandatory to be certain the improvements made to the property justify the increased price.

• An independent inspection report, conducted by a professional with no connection to other participants in the transaction, is also mandatory when the price jump is more than 20 percent. If there are repairs that are still needed that could affect the "health and safety" of the purchasers, they must be completed and a reinspection conducted before the closing.

Comments
A new threat this shopping season: toys that can spy on kids

A new threat this shopping season: toys that can spy on kids

ST. PETERSBURG — Not all sinister toys are as obvious as a Chucky doll. Many present more subtle threats — choking hazards, high lead content, privacy concerns. And as the biggest shopping season of the year kicks off, consumer advocates are urging s...
Updated: 2 hours ago
Indian automaker plant is latest sign of Detroit comeback

Indian automaker plant is latest sign of Detroit comeback

It has been years since Detroit, birthplace of the American auto industry, was a steady producer of the manufacturing jobs that defined it as the Motor City. But its comeback is entering a new phase.The latest milestone came this week, with the annou...
Updated: 2 hours ago
Big Tobacco’s anti-smoking ads begin after decade of delay

Big Tobacco’s anti-smoking ads begin after decade of delay

Associated PressWASHINGTON — Decades after they were banned from the airwaves, Big Tobacco companies return to prime-time television this weekend — but not by choice. Under court order, the industry for the first time will be forced to advertise the ...
Updated: 2 hours ago
Ybor ’s first public school, long gone, still has a story to tell about district’s history

Ybor ’s first public school, long gone, still has a story to tell about district’s history

TAMPAIt’s been more than a century since Ybor City’s first public school was demolished on the plot of land now identified as 1311 E Eighth Ave.For the past 22 years, the popular concert venue New World Brewery took up the space and one next door. No...
Updated: 2 hours ago
Barricades reinforce security for holiday events on St. Petersburg’s downtown waterfront

Barricades reinforce security for holiday events on St. Petersburg’s downtown waterfront

ST. PETERSBURG — World and national tragedies are changing the city’s approach to security for special events at North Straub Park.With the approach of the holidays, concrete barricades have been erected at a section of the park’s perimeter, where Fo...
Updated: 3 hours ago
Copa Airlines to fly daily nonstop from Tampa to Panama next summer

Copa Airlines to fly daily nonstop from Tampa to Panama next summer

TAMPA — Panama’s Copa Airlines, which four years ago became the first airline to offer service between Panama and Tampa Bay, said it is increasing its nonstop service between Tampa International Airport and Panama City to daily flights starting in Ju...
Updated: 8 hours ago
Irma did not stop tourists from setting record visits to Florida so far in 2017

Irma did not stop tourists from setting record visits to Florida so far in 2017

Despite Hurricane Irma, Florida hit another record high number in tourists visiting the state in the first nine months of this year, according to figures released this week.Visit Florida, the state’s tourism bureau, said 88.2 million visitors came to...
Updated: 9 hours ago
FCC chairman unveils proposal to repeal net neutrality

FCC chairman unveils proposal to repeal net neutrality

WASHINGTON — Federal Communications Commission Chairman Ajit Pai on Tuesday followed through on his pledge to repeal 2015 regulations designed to ensure that internet service providers treat all online content and apps equally, setting up a showdown ...
Updated: 10 hours ago
Crime Stoppers, Straz Foundation still working out Seminole Heights reward money

Crime Stoppers, Straz Foundation still working out Seminole Heights reward money

TAMPA — You can collect $110,000 in reward money for information leading to an arrest in the Seminole Heights killings, but for now you’ll have to make two stops.The David A. Straz Foundation announced Monday it would contribute $10,000 to a reward f...
Published: 11/21/17
Hurricane Irma hurt some Tampa Bay home sales even in October

Hurricane Irma hurt some Tampa Bay home sales even in October

Pinellas County home sales took another hurricane-related hit in October as the rest of the Tampa Bay area bounced back from Hurricane Irma.But while prices in all four counties rose once again, the rate of increase continues to slow. Hillsborough’s...
Updated: 9 hours ago