Lakeland FHA Mortgages Limits on Short Sales Relaxed

There is great news for Lakeland mortgage borrowers looking to use FHA mortgage to finance short sale, foreclosed, or “flipped” properties.

As of February 1, 2010, the Department of Housing and Urban Development (HUD) is relaxing FHA mortgage lending rules that previously disallowed the insuring of mortgages on homes that are owned by sellers for less than 90 days – a move that could help expedite the rehabilitation and resale of foreclosure properties.

More often than not, these homes consist of short sales, foreclosures, and otherwise “flipped” properties that investors are looking to pass off at a profit, yet are still priced very attractively for Lakeland home buyers.

In a housing market where tighter lending requirements have made FHA financing the only option for some buyers, this 90-day policy has (1) kept some homebuyers from being able to purchase affordable homes and (2) prevented the quick resale of foreclosed properties, which affects the ability of communities to stabilize and rebuild.

Research has shown that the buying, fixing, and reselling of foreclosed properties is often achieved in less than three months time.

The temporary waiver, which will expand access to FHA mortgage insurance to many, will be in effect for a period of one year, unless extended or withdrawn by the FHA.

With this in mind, now is an excellent time for Lakeland home buyers and those who have recently purchased a foreclosed property and those who may be on the fence about purchasing a foreclosure as a short-term investment.

“FHA borrowers, because of the restrictions we are now lifting, have often been shut out 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.”

To ensure FHA borrowers are protected from inflated prices, the policy has certain restrictions, including:

All transactions must be arms-length and there can be no identity of interest between the buyer and seller.
If the sales price of the property is 20 percent or more above the seller’s acquisition cost, the lender must meet specific conditions for the waiver to apply.
The waiver is limited to forward mortgages, and cannot be used under the Home Equity Conversion Mortgage (HECM) purchase program.

You can read the full text of the waiver on HUD.gov. As always, if you are considering the purchase of a home here in Lakeland, and need an FHA mortgage, give me a call. I’m here to help.

I hope you found this post useful! As always, if you or anyone you know is in need of a local Florida mortgage broker, I’m your guy. Call me at 863-604-3019 or apply online for your Florida mortgage. We’ll keep you posted and let you know when it’s time to pull the trigger!

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