Just released on Friday January 15, 2010, HUD announced that the ban that prohibited FHA from insuring a home owned by a seller less than 90 days will be lifted. This new policy will go into effect on Febuary 1, 2010, and be effective for duration of a year. This policy is to help stabilize home values by allowing buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. A lot of these homes were found to be sold within 90 days, and out of the reach of those trying to use their FHA because of the ban. Now with the ban lifted for at least a year.
However for those investors that want to flip properties by reselling at inflated prices please take note of the following restrictions:
- 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 Home Equity Conversion Mortgage (HECM) for purchase program.
For more details please visit www.hud.gov
Prime Market Realty
Office: 630 235-3848