90-Day Seasoning Requirement Lifted by FHA
On Friday, HUD Secretary Shaun Donovan announced a temporary policy that would allow FHA-mortgage insurance on homes that have been bought and resold within a 90-day period. The current regulations have prevented many would-be home buyers from purchasing many HUD-owned properties, bank-owned properties, or properties sold through private parties unless they’ve sat for more than 90 days.
This is great news not only for homebuyers, but investors too. Real estate investors and rehabbers have been vital to the real estate recovery, purchasing and rehabilitating properties which have sat vacant and often vandalized after foreclosure. Oftentimes, the process of buying, fixing and re-marketing the home occurs in a period much faster than 90-days and this will allow a much larger buyer pool and give many first-time homebuyers access to these properties.
The new policy will go in effect on February 1, 2010 and will remain in place for one year unless it is extended or withdrawn, and the waiver is limited to properties which meet certain general conditions such as:
- Sale must be an arms-length transaction
- If the property is re-sold for more than 20 percent of the purchase price, the resale price must be justified because of improvements made or other justification given by an appraiser.
- Only pertains to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for Purchase program.
More information can be found at the HUD website.
