Do the “flip” appraisal rules apply to a line of credit used to purchase houses to be flipped in the instance where a negative pledge is placed on each acquired property? Would the answer change if a Deed of Trust were issued on each acquired property under the line?
The flip rules apply to higher priced mortgages where the seller purchased the property:
90 days or less prior to the current sale and the sale price exceeds the seller’s purchase price by more than 10%; or
91 to 180 days prior to the current sale and the sale price exceeds the seller’s purchase price by more than 20 percent.
And a higher-priced mortgage loan means a closed-end consumer credit transaction secured by the consumer’s principal dwelling with an APOR that exceeds the interest rate by 1.5, 2.5 or 3.5%, respectively.