In a move that surprised even the most attentive among our ranks, on January 15th, 2010 The US Department of Housing and Urban Development waived a set of requirements related to foreclosure sales that had have often shut out FHA buyers “from buying affordable properties,” said FHA Commissioner David H. Stevens. “This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity.”

 Sellers, many of whom are investors who have learned to capitalize on the many opportunities in the foreclosure market, now have a new market of buyers that are currently a major part of the housing resurgence, courtesy of the First-Time Homebuyer tax credit which was extended through June of this year. Coupled with this Suspension of the 90-Day Seasoning Rule and the First-Time Homebuyer credit, those investors who are able to make moves on foreclosed properties in a weary market may be poised for big success in 2010.

The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. In an effort to protect FHA borrowers against what they deemed the 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 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.

While the government has still failed to admit the legitimacy of our business in whole, they have certainly taken a step in the right direction with this action as they create an excellent opportunity for community conscious investors to assist in the renovation and resale of thousands of foreclosures across the country.

Click here to view the Waiver of Requirements of 24 CFR 203.37a(b)(2), or visit www.NationalREIA.com/LegislativeInfo or http://www.hud.gov/ for more information.

Information provided by the  National REIA