By Mark Rafeh-Century 21 Hilltop / Loan Centers of America
On Friday FHA released an update to their policy waiving the 90 day seasoning period that was in place for properties that were foreclosed on by their lenders.
My first take on it was, “wow, investors finally have something to rejoice about”. Since 2003 investors, including myself have had to deal with the 90 day ownership holding period prior to reselling the property to a buyer using FHA financing.
Unfortunately this is still going to be an issue. Although I personally don’t agree with the policy, it was designed to protect HUD (FHA) from inflated values created in an area by property flipping schemes. This new waiver doesn’t eliminate that clause.
The fine print on the waiver taken from HUD’s website states Section 203.37 a(b)(2) of FHA regulations, 25 CFR 203.37a(b)(2) is hereby waived for a one year period from today’s date with regard to sales of properties acquired by mortgagees, whether sold directly by the mortgagees or by their subsidiaries or by vendors to whom they have transferred titles to propertied for the purpose of effectuating sales of those properties.
So what is the bottom line for investors……
- Borrowers can now use FHA financing for buying properties owned less than 90 days that were acquired by foreclosure by mortgagees (i.e. lenders)
- In addition to mortgagees, it includes any subsidiary of the lender or vendors used to market and sell property.
- The new waiver rule will apply whether or not the mortgagee is state-or federally-chartered. The original policy restricted it to state and federally charted entities.
Those of us were don’t fall in the category of a mortgagee ( the entity that actually foreclosed on the property) or a vendor ( an entity that has a agreement or contract with the lender) are still bound to the 90 day holding period before selling a home to a buyer who is using FHA financing.
There is nothing in the waiver guideline that mentions or implies that any other party will qualify other than Mortgagees or Vendors.
In areas like mine ( Simi Valley) this is a small step forward for those home buyers struggling to get a property in this low inventory environment, it will help open up some of the REO’s to them that were once not eligible for FHA financing. As for investors looking to capitalize on auctions and trust deed sales, this is of absolutely no help…
The administration has extended the deadline for the first time buyer tax credit the April 30, 2010. It has also included a tax credit for the “Move Up” buyer for $6500. So both first time buyers and move up buyers can now take advantage of this credit. To get an easy to read table on the limitations of this credit click here…
Don’t miss out on this great home buying incentive….
California enacted a new law recently that many were hoping would shorten the process of a Short Sale approval to 21 days. Unfortunely, the new law which goes into effect Jan 1 has been mischaracterized by some practitioners as landmark legislation calling for a 21-day turnaround for short sale approvals.
The law only requires once a short sale has been approved, the beneficiary must respond to the approval within 21 days. The new law inserts a short payoff amount request into the existing payoff demand law which generally requires a lender to respond to a request for a payoff demand statement within 21 days from when it is requested, typically by escrow.
You can read the newly enacted law here…
I got a call yesterday from Scott Scredon at the Consumer Credit Counseling Services in Atlanta. He says they’ve seen a distinct change in callers. “We’re getting calls from engineers and attorneys and post graduate students,” he says. “Many of these people run through their 401Ks and their savings and start living off credit cards and then they call a counseling agency for help. So it’s a new kind of person we’re seeing today, but it’s a sign of the times.”
The largest percentage of filings has now switched from the subprime loans to prime loans, in fact prime rate defaults have doubled this year. The bulk of the trouble is centered in four states, California, Nevada, Michigan and Florida.
Will this lower prices even more? Only time will tell. For our area of east Ventura County we see an extremely low inventory of homes for sale and multiple offers on most homes. Especially the short sales and REO listings. Whether the future defaults will come out as Short Sales or Bank Owned properties still remains to be seen. In the last 4 months we have seen an increase in the median sales price for the Simi Valley area.
Will Foreclosures come out with a vengence? Time will tell.
If your having trouble making your mortgage payments, contact us at email@example.com. We can help guide you through the options that can save you from foreclosure.