FHA extends financing for immediate purchase of foreclosed homesMortgagePress.comFHA, vacant properties, Bush administration, Federal Housing Administration
In an effort to stabilize declining home values in certain
neighborhoods, the Bush administration has announced a temporary
policy that will extend government-backed mortgage insurance and
allow for the immediate sale of vacant foreclosed properties.
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
purchased by owner-occupants, will no longer be subject to the
customary 90-day waiting period.
"A glut of foreclosed and abandoned homes harms neighborhoods,
frustrates homebuyers and delays a community's recovery," said
Brian D. Montgomery, Assistant Secretary of Housing-Federal Housing
Commissioner. "The action we take today will allow homebuyers to
purchase these homes in much greater numbers and ease the excess
supply of unsold homes in neighborhoods across the country."
FHA's new temporary policy will help stabilize neighborhoods
experiencing high rates of foreclosure by reducing the inventory of
unsold properties. Many foreclosed properties remain vacant for
months, inviting vandalism and reducing values of surrounding
homes. To address that sizeable inventory, lenders have hired
companies that specialize in the marketing and disposition of
foreclosed homes. It's reasonable and appropriate that these firms
have the ability to sell the properties to borrowers using FHA
financing.
With certain exceptions, FHA currently prohibits insuring a
mortgage on a home owned by the seller for less than 90 days. This
prohibition is intended to prevent property "flipping," a predatory
practice that strips a home of its equity before being quickly
resold at an inflated price to an unsuspecting buyer. FHA's new
policy will permit the immediate sale of foreclosed properties to
legitimate borrowers wishing to use FHA-insured financing.
To read the full text of this new temporary policy, visit click
here.
