For many home buyers, FHA-insured mortgage financing is often the only means of home financing available. With certain exceptions, FHA has granted a temporary waiver to allow FHA home borrowers access to recently foreclosed properties by using FHA mortgage insurance for home purchase and resale within 90 days. The policy change will permit home buyers to use FHA insured financing to purchase HUD owned properties, bank-owned properties, or properties resold privately. This change in policy is expected to allow homes to resell as quickly as possible, helping to stabilize real estate prices.
The waiver took effect February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner.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 home 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 home 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.
More details regarding this temporary policy are in the text of the waiver, available on HUD’s website.
http://www.hud.gov
http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf
