Tuesday, 19th of January 2010 at 08:46:17 AMStarting Feb. 1, housing regulators will suspend for one year a 90-day waiting period on property resales that it says has put FHA borrowers at a disadvantage in bidding on foreclosed properties.
The waiting period on FHA financing of resales was implemented in 2003 to protect the Federal Housing Administration’s mortgage insurance program from the impacts of home flipping. During that timeframe, the FHA was finding that investors were buying homes and just reselling them for much higher than they paid without actually doing any work to improve the value of the home. They just happened to beat other buyers to the offer table.
In this market, there are so many properties for sale that have issues that having investors put work into them to have an advantage over other lower priced properties makes that policy bad for the consumers. I’m glad to see the FHA test the suspencion of this policy and I think it will help to move inventory a little faster and encourage sellers to put a little work into their homes.
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