This is Amazing news! Please read.
HUD has decided to waive the 90 day seasoning financing contingency for buyers. What does this mean? Read on.
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!
I CANNOT STRESS THE IMPORTANCE OF THIS ENOUGH! This is groundbreaking, and will be unbelievable for those currently, or planning on investing in foreclosures via short sales.
The 90 day seasoning issue has long been an issue for investors and agents when working with short sales. This is changing on Feb 1st.
Below is an excerpt from the HUD website:
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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.
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This will have such a positive impact on the housing ,market, investors, agents, buyers, sellers, and everyone else as a whole! It’s about time. We’ve been anticipating this, and it has arrived.
Ok, here are a few important key points. There a few simple stipulations that are part of this rule, which are actually quite simple to meet. Another – it’s only supposed to last for ONE YEAR. I anticipate that this will change, once they realize the positive impact this has on the housing market and economy as a whole.
Here are a few more rules:
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The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner.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.
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Read the full details on the pdf released by HUD – Get Flip FHA pdf HERE
IMPORTANT: If you aren’t doing short sales yet, or simply want to learn more, get my free ebook on short sales NOW – the clock is ticking! Get your FREE short sale ebook HERE
Don’t forget to leave your comments on the great news!
{ 1 comment… read it below or add one }
This appears to be horrible news for flipping a property. If you want to sell the house with FHA financing, you can only sell it for 20% more than what you paid. When considering your buying and selling costs, and any fix up costs, there is no profit left. Since 80% of the sales are financed with FHA financing, investors are totally screwed. FHA just shot themselves in the foot. David, please check into the details of this and what it means for flipping. On the surface, I don’t see how they think this could possibly encourage investors to buy their properties.