Sunday, January 17, 2010
New FHA Rules to Speed Foreclosure Sales
The Real Estate Industry has been buzzing with news out of Washington that should have a major effect on investors interested in the foreclosure market. HUD Secretary Shaun Donovan announced a temporary policy yesterday 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.
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.
"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,
The new FHA rule will open doors that have been closed before, not only because of the new FHA buyers, but also because it removes much of the stigma over property flipping by helping to preserve property values.