FHA’s 90-Day Seasoning Requirement is Temporarily Lifted

HUD announced that it will temporarily suspend the 90-day seasoning requirement (waiting period) for property re-sales financed with FHA loans. The 90-day wait has made it more difficult for FHA borrowers to bid on foreclosures, thus, slowing down the housing recovery.

Why the 90-Day Seasoning Requirement was Established

The reason why HUD established the 90-day wait in 2003 was to protect FHA’s mortgage insurance program from predatory lending practices and the impacts of investor house flipping.

The policy did not apply to properties repossessed by Fannie Mae, Freddie Mac or state/federally chartered financial institutions.

A Move in The Direction of Housing Recovery

It is hoped that the FHA’s decision to lift the 90- day wait will help the current housing market by allowing homebuyers to use FHA mortgages to buy foreclosure homes sooner as well as help investors sell their foreclosure investment properties quicker.

According to Federal Housing Commissioner Brian Montgomery, “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.”

“As a result of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential homebuyers,” said HUD Secretary Shaun Donovan. “FHA has an unprecedented opportunity to fulfill its mission by helping many homebuyers find affordable housing while contributing to neighborhood stabilization.”

To qualify for FHA-insured mortgage financing, THe FHA requires that homes purchased with FHA loans must be in move-in condition, which means the seller must make all necessary repairs, including REO (bank owned) homes. Many lenders have numerous properties to unload so how much the 90-day lift will positively impact the housing recovery is hard to tell.

90-Day Lift Specifics

• Lift goes into effect February 1, 2010
• 90-day requirement expires in one year
• Sales prices that increase by 20% or more have special restrictions
• Properties must be in (safe, secure and sound) move-in condition
• Only applies to properties acquired through foreclosure

Foreclosure Expert Charlotte, NC 

If you’re in the market to purchase a foreclosure property in Charlotte, NC, you need Leigh Brown , the leading real estate agent and foreclosure expert in Charlotte on your team!

You can reach Leigh by filling out her online contact form or by calling her at (704) 688-5005 or toll free at (866) 440-7136.

Sources:
HUD
Inman News