Changes In FHA
HUD is making some changes. Starting Feb 1, 2010 HUD will relax FHA rules that prohibit insuring mortgages on homes that are owned by the seller for less than 90 days -- a move that could help expedite the rehabilitation and resale of foreclosure properties.
In a housing market where tighter lending requirements have made FHA financing the only option for some buyers, this 90-day policy has (1) kept some homebuyers from being able to purchase affordable homes and (2) prevented the quick resale of foreclosed properties, which affects the ability of communities to stabilize and rebuild. The original intent was to help stop flipping, but it also stops legitimate rehabbed properties from being sold in a timely fashion.
Research has shown that the buying, fixing, and reselling of foreclosed properties is often takes less than three months' time.
The temporary waiver will be in effect for one year, unless extended or withdrawn by the FHA.
The policy has certain restrictions, to protect FHA borrowers from inflated prices, including:
- All transactions must be arms-length and there can be no identity of interest between the buyer and seller.
- If the sales price of the property is 20 percent or more above the seller's acquisition cost, the lender must meet specific conditions for the waiver to apply.
- The waiver is limited to forward mortgages, and cannot be used under the Home Equity Conversion Mortgage (HECM) purchase program.
Read the entire text of the waiver on the HUD website.
RELATED ARTICLE: More Changes in FHA
__________________________________________________________________________________________________________________
To see homes on the market, use our free MLS search, or contact us for information about the Frederick Real Estate Market or the Montgomery County Real Estate Market.
_________________________________________________________
