According to investors, there may be potential complications about the loosening of rules on property “flips”.  The recent change done by the Obama administration allows investors to resell houses and rehabbed them in less than 90 days to buyers using low-down payment FHA mortgage financing.

Although the change in policy is welcomed by most investors, complications may still arise like the 20% cap on the difference between an investors acquisition cost of a foreclosure and the price paid by the new buyer. If the price gains reach more than 20%, the price should be justified through documents stating the improvements done in the property and the impact of these improvements on the property’s value.  This 20% limit is reasonable but can pose problems for investors who overspend on significant improvements to their properties.  Also, even if there are documents stating how much value an investor has added, they would have to face scrutiny from lenders.  FHA can sanction lenders for violating rules or kick them out of the program.

Overall, the change in policy will help open up foreclosures to FHA buyers and put a lot of houses back in the market.