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Tuesday, May 18, 2010


In an effort to help bring stability to home values and accelerate the sale of vacant properties, HUD announces a temporary policy that expands access of FHA mortgage insurance to homes owned by sellers for less than 90 days.  This temporary policy change will take effect February 1, 2010 and last for one year.

  • HUD likes to see “homeowners” in their houses
  • Current policy prohibits buyers from getting a FHA mortgage (3.5% down payment) on homes that have been owned by the seller for less than 90 days.
  • They do this to prohibit flipping.
  • FHA research has found that it often takes less than 90 days for an investor/seller to acquire, rehab and resell distressed/vacant properties.
  • Investor/sellers are often unwilling to hold a house for more than 90 days because of holding costs and the risk of vandalism.
  • This makes the most affordable homes ineligible for FHA financing – the most affordable type of financing available to first-time buyers

Allowing these most affordable properties to be financed FHA should:
  • Stabilize real estate prices
  • Revitalize neighborhoods and communities
  • Makes an important and affordable home available to first-time buyers who often don’t have more than 3.5% down payment!
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