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The temporary waiver of the property flipping rule will permit lenders to more easily sell properties acquired as a result of foreclosure to homebuyers who use FHA financing.  Both lenders and the property disposition firms they hire (or with whom they are affiliated) are now exempt from the 90-day lock-out period that once prevented homebuyers from using FHA financing to purchase properties that were owned by an individual/entity that held the property for less than 90 days. Under the new waiver, homes that were foreclosed on and are being sold by the mortgage holder or on its behalf may be purchased by FHA borrowers without regard for the 90-day seasoning period.  To prevent future flipping of any properties purchased through the foreclosure sales, the subsequent sales of the properties will continue to be subject to the standard regulatory requirements - lockout for the first 90 days and two appraisals required to justify any increase in value of 100% or more for sales that occur within 90 to 180 days.
 
The waiver is effective for all FHA mortgage insurance endorsement requests on or after June 9, 2008 and expires for all loans for which the sales agreements were signed by the seller and buyer prior to June 8, 2009.  Again, the exemption applies only to the initial sale of a foreclosed property and does not extend to a subsequent sale of that property.

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Florida has not "even begun to see the end of the foreclosure issue," state Chief Financial Officer Alex Sink warned.

Speaking to a group of 450 business leaders in Orlando on Friday, Sink said most experts believe that foreclosures will continue to rise sharply through August and September.

"This mortgage mess is more sophisticated than anything we've ever seen before," Sink said.

Florida was No. 4 in April foreclosure activity in the U.S., with a nearly 150 percent increase from the same period a year ago. RealtyTrac reported there were 35,264 properties in some state of foreclosure, or one for every 242 properties. April's numbers were nearly 17 percent higher than March and 146 percent greater than April 2007.

However, Sink noted that Florida has seen its share of real estate boom-and-bust cycles. Quoting from Frederick Lewis Allen's "Only Yesterday" -- a history of the 1920s -- Sink noted that, in the 1920s, speculators were buying properties after seeing only blueprints and putting as little as 10 percent down.

She said Florida must continue to reinvent itself by recruiting high-tech, high-paying jobs to the state and building on the state's tourism assets.

"We have to be in Europe and Asia and encouraging people to come to Florida," Sink said. "If we're not, we're not being very smart."

The state must also focus on reforming its hurricane insurance coverage, Sink said, noting that businesses subsidize 40 percent of the state's coverage.

And she encouraged business leaders to stay engaged with local and state governments.

"We need your help to establish priorities in these difficult budget times. We need to hold hands instead of being on opposite sides of table," Sink said.