FHA has lifted the 90-day seasoning requirement!

By
Real Estate Agent with Highland Realty

The news is spreading fast...  As reported out from FHA on January 15, 2010 -

HUD TAKES ACTION TO SPEED RESALE OF FORECLOSED PROPERTIES TO NEW OWNERS

Measure to help bring stability to home values and accelerate sale of vacant properties WASHINGTON -

In an effort to stabilize home values and improve conditions in communities where foreclosure activity is high, HUD Secretary Shaun Donovan today announced a temporary policy that will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties.

The announcement is part of the Obama administration commitment to addressing foreclosure. Just yesterday, Secretary Donovan announced $2 billion in Neighborhood Stabilization Program grants to local communities and nonprofit housing developers to combat the effects of vacant and abandoned homes.

"As a result of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential homebuyers," said Donovan. "FHA has an unprecedented opportunity to fulfill its mission by helping many homebuyers find affordable housing while contributing to neighborhood stabilization."

With certain exceptions, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. This temporary waiver will give FHA borrowers access to a broader array of recently foreclosed properties.

"This change in policy is temporary and will have very strict conditions and guidelines to assure that predatory practices are not allowed," Donovan said.

In today's market, FHA research finds that acquiring, rehabilitating and the reselling these properties to prospective homeowners often takes less than 90 days. Prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition adversely impacts the willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-day period of time.

The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities. "FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties," said FHA Commissioner David H. Stevens.

"This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity." The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner.

To protect FHA borrowers against predatory practices of "flipping" where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general conditions: * All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.

* In cases in which the sales price of the property is 20 percent or more above the seller's acquisition cost, the waiver will only apply if the lender meets specific conditions.

* The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program. Specific conditions and other details of this new temporary policy are in the text of the waiver, available on HUD's website.

 

Dave Rosenmarkle

Broker/Owner

Highland Realty

Arlington, VA

(703) 538-2566

davidrose@mris.com

www.HighlandAgents.com

 

 

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Re-Bloggged 24 times:

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Tags:
firsttime buyer
investors
flipping
real estate financing
real estate
fha

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Rainmaker
1,161,856
Gene Riemenschneider
Turning Houses into Homes
Home Point Real Estate

I had heard about this but did not catch the details.  The 20% cap sounds like another great socialist program out of Washington.

January 18, 2010 08:18 PM
Rainer
34,373
Roger Howell
Fairway Independent Mortgage Corporation

I think its a good idea, there are guidelines for the waiver designed to prevent fraud.  I see lots of conditions for the loan officer to gather. 

January 20, 2010 04:47 PM
Rainmaker
1,234,950
Charles Stallions
800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl.
Charles Stallions Real Estate Services

It is about time abeit for a limited time. Flipping is not what got us into this mess. A buyer should be able to pay what a seller is willing to take and a bank is willing to loan.

January 21, 2010 08:45 PM
Anonymous #85
Anonymous
Jerry

What happened to capitalism.

A 20% limit is socialism.

Most properties need 20% improvements.

Expenses are nearly 10%, in and out of a 'flip'

Where's the profit?

January 25, 2010 08:28 AM
Rainer
143,253
Matthew Bartlett
Century 21 Masters/Lic. #01353034

Thank you Dave for the info. However, the more the government gets involved the more problems they create. The same people who are making the decisions now are the same individuals that created the problems in the first place.

February 11, 2010 12:14 AM
Anonymous
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Rainmaker
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Dave Rosenmarkle

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