Another government rule change — but this time, it is finally for the investors! “HUD Takes Action to Speed Resale of Foreclosed Properties to New Owners” new government measure will absolutely bring stabil ity to home values and accelerate sale of vacant properties. And this will be an absolute BOON to investors by shortening their hold time and increasing their profits.
In an effort to stabilize home values and improve conditions in communities where foreclosure activity is high, HUD Secretary Shaun Donovan nnounced 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.
Secretary Donovan also just announced $2 billion in Neighborhood Stabilization Program grants to local communities and nonprofit housing developers to combat the effects of vacant and abandoned homes. (I discussed this in my prior Blog Here.)
“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.
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 took effect February 1, 2010 for one year, unless otherwise extended or withdrawn by the FHA Commissioner. Specific conditions and other details of this new temporary policy are in the text of the waiver, available on HUD’s website here.
Talk about great news for investors. No more waiting 90 days to sell your houses. And now lenders will be selling faster too. This is going to absolutely help the real estate markets recovery. If you want your piece of the foreclosure profits pie, you must join me this Wednesday in my FREE New Foreclosure Investor Webinar. We have limited space, so you must register in advance here or call 800-310-7730 x2.
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