On Dec. 28, the Federal Housing Administration (FHA) announced it would once again extend its waiver of its antiflipping regulations, this time through Dec. 31, 2012, "unless otherwise extended or withdrawn." In normal market times, the regulations are intended to prevent investors from using FHA financing to generate profits from buying properties and doing little to improve them, and then quickly turning them over for much larger sums.

Acting FHA Commissioner Carol Galante stated in a press release, "This extension is intended to accelerate the resale of foreclosed properties in neighborhoods struggling to overcome the possible effects of abandonment and blight." Galante added, "FHA remains a critical source of mortgage financing and stability, and we must make every effort to promote recovery in every responsible way we can."

The anti-flipping regulations were waived first back in 2010, and that waiver originally extended through Jan. 31, 2011. But the Department of Housing and Urban Development acted again to extend the waiver through all of 201 1. With this latest announcement, the waiver will be extended through all of the current year but all other terms of the existing waiver will remain the same.

Since the original waiver took effect on Feb. 1, 2010, FHA has insured nearly 42,000 mortgages worth more than $7 billion on properties that resold within 90 days of purchase, HUD said.

The affected FHA rules, with certain exceptions, are designed to prohibit insuring a mortgage on a home owned by the seller for less than 90 days. The waiver of this rule is designed to allow homes to resell as quickly as possible, in order to help stabilize real estate prices and revitalize neighborhoods, according to HUD.

The waiver is limited to home sales that meet the following conditions: 1) they must involve forward mortgages, not Home Equity Conversion Mortgage (HECM) loans for purchase; 2) they must be arm'slength transactions with no identity of interest between buyer and seller; and 3) where the new sales price is 20 percent more than the seller's original purchase price, the lender must meet specific conditions and document the reasons for the higher sales price.