U.S. Government Speeding Foreclosure Resales Up

by Houston Agent

The U.S. government is taking action to speed the resale of foreclosed properties by temporarily expanding access to Federal Housing Administration mortgage insurance, U.S. housing officials said.

Effective as of Feb 1, the Housing and Urban Development Department will waive for one year an FHA rule that prohibits insuring a mortgage on a home owned by the seller for less than 90 days. This will allow for foreclosed homes to resell even more quickly; FHA research shows acquiring, rehabilitating and reselling foreclosed properties to prospective homeowners often takes less than 90 days.

Image by © Todd Bigelow/Aurora Photos/Corbis

The old rule also discouraged sellers from signing contracts with FHA buyers because of holding costs and the risks of vandalism from allowing a property to sit vacant more than 90 days, the department said. This new rule’s goal is to also help stabilize real estate prices and revitalize neighborhoods.

“This change in policy is temporary and will have very strict conditions and guidelines to assure that predatory practices are not allowed,” HUD Secretary Shaun Donovan said.

“FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties,” said FHA Commissioner David Stevens.

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.

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