On 1/15/2010 came the official announcement from the HUD office.As of 2/1/10, FHA buyers can buy properties that have been owned by the seller for less than 90 days.
HUD has decided to waive the 90 day seasoning financing contingency for buyers. Effective February 1st 2010, there will no longer be a requirement for a seller of a property to be on title for 90 days or more in order for approval of an FHA backed loan. This is incredible news, since the majority of buyers in today’s market are FHA buyers!
This is unbelievable news for those currently, or planning on investing in foreclosures. This will bring the real estate investors back to the market and will greatly reduced the inventory of foreclosed properties, which will begin the turn-around of the housing market! The 90 day seasoning issue has long been an issue for investors and agents.
Below is a summary of the rule from HUD:
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. (end of summary)
This will have such a huge positive impact on the housing market, for investors, agents, buyers, sellers, and everyone else as a whole There are a few important key points, and a few simple stipulations that are part of this rule, 1. it’s only supposed to last for ONE YEAR. Which I anticipate will change, once they realize the positive impact this has on the housing market and economy.
Here are a few more rules:The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of “flipping” where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general conditions:
- 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.
Please click here for a copy of the signed waived 90 day rule: http://www.reojiminc.com/Investor_Services/page_2193702.html