HUD Waives 3-Month FHA Seasoning Rule, to Speed Up Resale of Foreclosed Properties. What does this mean? Read on...
On Jan 15, HUD took action to reduce the inventory levels of foreclosed properties by waiving the 90-day FHA seasoning requirement. Currently, with certain exceptions, FHA will not issue mortgage insurance to the buyer of a home if the seller has owned the property for less than 90 days.
This is very good news for both real estate investors and buyers, since more and more buyers in today's market are FHA buyers, who will now have access to a wider array of foreclosed properties.
HUD secretary Shaun Donovan says, "This change in policy is temporary and will have very strict conditions and guidelines to assure that predatory practices are not allowed."
And FHA commissioner David H. Stevens added, "FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties. This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity."
So buyers will be able to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, and properties resold through private sales. The waiver will go into effect on Feb 1, 2010, and will be effective for one year... unless extended or withdrawn by the FHA commissioner. I expect this to continue once they realize the positive impact this will have on the housing market, and the economy as a whole. This is certainly a positive step.
Here are a few rules - from the HUD website:
- 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 (Reverse Mortgage) Home Equity Conversion Mortgage - (HECM).
Read the details - in this pdf released by HUD. Get the FHA Flip pdf Here.