HUD Changes Flip Policy
Effective February 1,
2010 the Department of Housing and Urban Development (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.
Research has shown that the buying,
fixing, and reselling of foreclosed properties is often achieved in less
than three months time.
The temporary waiver, which will expand
access to FHA mortgage insurance to many, will be in effect for a period
of one year, unless extended or withdrawn by the FHA. With this in mind,
now may be an excellent time to contact clients who have recently
purchased a foreclosed property and those who may be on the fence about
purchasing a foreclosure as a short-term investment.
"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."
To ensure FHA
borrowers are protected from inflated prices, the policy has certain
restrictions, 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.
You can read the full
text of the waiver on HUD.gov.
Whether
you're interested in buying your first home, your next home, or just
want to know more about home-ownership in general, I encourage you to
check out a couple of great online resources: http://www.texasrealestate.com/ or http://www.har.com/ and for all of your Pearland TX and Northern Brazoria and Galveston County real estate needs, please visit my site at http://www.danfrankrealty.com/. All of these sites offer tons of useful, real estate-related information geared specifically for Texans.
Danny Frank is a local Pearland TX Real Estate expert! You can see my entire blog at http://www.pearlandrealtyblog.com