Hi Guys,
Here is something that I received from one of the asset managers that I represent with Disposolutions. This is an email that she sent me and I am copying it here for you to read....how cool is this?!
"FHA Lessons 90-Day Rule to Help Lenders Sell REOs
Kerri Panchuk | 06.16.08
Lenders will no longer find themselves struggling with the Federal Housing Administration's (FHA) 90-day rule, which prevents sellers who have owned a property for less than 90-days from offloading a home to a buyer who intends to be insured by the FHA.
While the FHA implemented this rule to prevent the practice of flipping in the otherwise safe FHA-insured atmosphere, lenders who are trying desperately to remove distressed properties from their books have been unable to seize the day with qualified borrowers because of the three-month waiting period.
The FHA said Monday, "For one year, the Federal Housing Administration (FHA) will insure foreclosed properties marketed and sold by property disposition firms on behalf of lenders. The properties, which must be purchased by owner-occupants, will no longer be subject to the customary 90-day waiting period."
Officials with HUD and the FHA saw the transition as a necessary step in curtailing urban blight and property decay in areas greatly impacted by foreclosures.
"A glut of foreclosed and abandoned homes harms neighborhoods, frustrates homebuyers and delays a community's recovery," asserted Brian D. Montgomery, Assistant Secretary of Housing-Federal Housing Commissioner. "The action we take today will allow home buyers to purchase these homes in much greater numbers and ease the excess supply of unsold homes in neighborhoods across the country."
This is not a good idea. This will only allow the investors to buy cheap, fix or hold then sell for a large profit. Still leaving the first time homebuyers holding the bag and not being able to buy a home.
I think it is terrific! I work with a lot of GOOD Investors (yes, I know that can seem like an oxymoron) here in the Greensboro area (North Carolina). I have two currently that have completely renovated their properties and have them for sale. We have a buyer for one that was previously a renter and wants to buy his first home. The seller is willing to pay 3% downpayment assistance, as well as 3% closing and at first FHA would not allow it because he owned it for 35 days. Now with this rule, we are placing a buyer that WANTS to own in his own home.
I agree that there can be some challenges with the slum lords out there, but for the GOOD guys...this is a plus!
Since investors cannot use FHA loans to buy investment properties I think the FHA is fairly safe in this regard. Will some unscrupulous investors try to beat the system? Most likely. Will some even get away with it? Probably. But many will get caught if they try. This is good news for me since was I being forced to pay a higher rate going conventional, but now can save some bucks going FHA 203K. Good news for several of my buyers as well.
Allowing homes to be sold quickly from investors who specialize in rehabbing them will be a bonanza to buyers and good for the neighborhoods. One thumbs up for the government.