Posts Tagged with "fha"

90 Day FHA Rule is Waived

Wednesday, January 20, 2010 - By Gate Arty

HUD has taken a major step to stabilize the real estate market by waiving the “90 day flip rule” effective February 1st, 2010. Currently, FHA prohibits insuring a mortgage on a home owned by the seller for less than 90 days. Originally the 90 day rule was put in place to protect FHA borrowers against predatory practices of "flipping" where properties are quickly resold at INFLATED prices to unsuspecting borrowers. This act will give FHA borrowers access to a broader array of recently 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. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities. To qualify these conditions must be met:

• All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.

• In cases in which the sales price of the property is 20 percent 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.

This waiver will be a major coup for real estate investors because the pool of available buyers is substantially increased. Before, investors had to wait 90 days before listing a property in MLS or hold a property for 90 days before selling to a FHA buyer – something most are unwilling to do because of holding costs & risks associated with delayed closings. This should be a major shot in the arm & should drastically reduce the “days on market” for home inventory.

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The Housing and Economic Recovery Act of 2008 & FHA

Wednesday, September 17, 2008 - By Gate Arty

The Housing and Economic Recovery Act of 2008 (HERA) is beginning to be implemented by FHA.  As of October 1, 2008 HERA will mandate FHA to require a minimum of 3.5% in down payment, up from the current 2.25% down payment.  Accordingly, mortgages with new FHA case numbers assigned on or after January 1, 2009, will require a down payment of 3.5% of the lesser of the appraised value or purchase price, PLUS ANY CLOSING COSTS TO BE PAID BY THE BORROWER.  The seller will still be able to pay up to 6% of the sale price towards the borrowers closing costs and prepaids.  FHA does allow gifts from relatives and government down payment and/or closing cost assistance (Keystone/SHIP), but no longer allows seller-funded down payment assistance (Nehemiah and Ameridream) as of October 1, 2008.

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Downpayment Reform

Monday, August 04, 2008 - By Gate Arty

The new Housing and Economic Recovery Act of 2008 contains a provision  that forbids FHA from insuring mortgages in which the downpayment comes directly, or indirectly, from an interested third party (such as the seller), beginning October 1, 2008.  

On Thursday, July 31, 2008, the FHA Seller-Financed Downpayment Reform and Risk-Based Pricing Authorization Act of 2008 (H.R. 6694) was introduced by several members of Congress.  Representatives Maxine Waters, Gary Miller, Al Green and Christopher Shays sponsored this bill that if passed and signed into law will allow downpayment assistance to continue indefinitely.

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Down-Payment Assistance Eliminated?

Wednesday, July 23, 2008 - By Gate Arty

Mortgage programs that offer down-payment assistance (DPA) assisted nearly $80,000 people buy homes in the depressed market of 2007. The Senate and House of Representatives are fast-tracking legislation that would likely abolish DPA programs. The repercussions could be devastating to the already ultra-sensitive real estate market.

DPA programs are operated by nonprofit organizations. These organizations provide buyers with money for their down-payment. In turn, home sellers reimburse the organizations and pay an administrative fee. These loans are insured by the Federal Housing Administration (FHA).

Mortgages with DPA account for almost 40% of FHA’s volume! It has been estimated that if DPA programs are eliminated, the direct impact on real estate could result in an estimated $50 billion in lost real estate sales & mortgages, not to mention the loss of jobs in the building & lending sectors of the real estate industry.

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