In an effort to stabilize home values and improve conditions in communities where foreclosure is high HUD secretary Shaun Donovan announced a temporary policy that will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties. 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. The waiver will take effect FEBRUARY 1St, 2010 and is effective for 1 YEAR, unless otherwise extended or withdrawn by the FHA commissioner.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 the seller or other parties participating in the sales transaction. • In cases in which the sales price of the property is 20% 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.