Friday, January 22, 2010

FHA Has Lifted the 90-Day Seasoning Requirement!

The Tampa housing market has been hit hard with a glut of foreclosed properties that have forced home prices to spiral downward, along with most areas in Florida and the rest of the nation. HUD Secretary Shaun Donovan has announced a temporary policy to ease FHA 90-day seasoning guidelines to facilitate the sale of foreclosed properties, which should bring price stabilization to the real estate market in Tampa, Florida and other areas across the country.

FHA has prohibited insuring mortgages on a home owned by a seller for less than 90 days. This has slowed the sale of many foreclosed homes. In the January 15, 2010 press release HUD Takes Action to Speed Resale of Foreclosed Properties to New Owners , HUD Secretary Shaun Donovan addressed this problem saying, “As a result of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential homebuyers. FHA has an unprecedented opportunity to fulfill its mission by helping many homebuyers find affordable housing while contributing to neighborhood stabilization.” FHA Commissioner David H. Stevens added, “FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties. This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity." The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner.

The lifting of the 90-day seasoning requirement by FHA will not only help first-time homebuyers and move-up real estate purchasers, but also investors who have purchased homes and have been unable to sell them in a timely and cost-effective manner. The press release stated, “In today’s market, FHA research finds that acquiring, rehabilitating and the reselling these properties to prospective homeowners often takes less than 90 days. Prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition adversely impacts the willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-day period of time.” Investors as well as purchasers stand to benefit directly from this policy made by FHA.

Ultimately the bottom line should be more home sales at a faster pace, reducing the inventory of all real estate including foreclosed properties and bringing some long awaited stabilization to the Tampa, Florida real estate market.

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