FHA Lifts Waiting Period, Extends Insurance Coverage - Real Estate * US * News * Story

Runway Angels
The superbowl of fashion shows, models walk down the runway at the 2009 Victoria's Secret Fashion Show.
The Richest Members of the US Congress
Recently, the Center for Responsive Politics found that there are 237 millionaires in the US Congress.
10 Tips to Get Out of Debt
Renowned financial author Gail Vaz-Oxlade takes a tough-love approach to helping couples in a financial crisis to face reality.

FEATURED QUIZZES

How Much Do You Know About Green?
Green has become part of our everyday lives. Green is everywhere-- energy, clothing, food, housing, transportation. It's a big business and a global business.
The Billionaire BFF's
Philanthropists. Bridge partners. Hockey players. Which responses are based on facts from Buffett's and Gates' real lives?
The Many Myths of Coca-Cola
Can you tell which statements are true, and which ones are just rumors?

SPECIAL REPORTS

Winterizing Your Portfolio
If 2009 was the winter of our discontent, will 2010 be a winter wonderland for investors? A lot depends on the recovery—or lack thereof.
Investor's Guide to Real Estate
Some even say the long-awaited recovery is here. Regardless, buyers and sellers alike can profit from our guide.
Alternative Investing
Stocks and bonds? Sure. But it's a big world out there for investors.

CNBC ON DIGG

FHA Lifts Waiting Period, Extends Insurance Coverage

Topics:Subprime Lending | Mortgages | Housing | Real Estate | Consumers

Sectors:Construction and Materials

By: Reuters | 13 Jun 2008 | 03:39 PM ET

Text Size

The U.S. Federal Housing Administration is temporarily lifting its required 90-day waiting period to help stabilize neighborhoods flooded with foreclosed properties, the Bush administration announced Friday.

AP
This latest effort will lift the waiting period normally required for homes purchased by owner-occupants that are financed through this federal mortgage guarantee program.

In addition, for a period of one year, the FHA will insure foreclosed properties marketed and sold by property disposition firms on behalf of lenders.

"A glut of foreclosed and abandoned homes harms neighborhoods, frustrates home buyers and delays a community's recovery," said Brian D. Montgomery, assistant secretary of housing-Federal Housing Commission.

"The action we take today will allow home buyers to purchase these homes in much greater numbers and ease the excess supply of unsold homes in neighborhoods across the country," he said.

The FHA typically prohibits insuring a mortgage on a home owned by the seller for less than 90 days in an effort to prevent property "flipping," a predatory practice that strips a home of its equity before being quickly resold at an inflated price to an unsuspecting buyer.

Many foreclosed homes remain vacant for months, inviting vandalism and reducing values of surrounding homes.

To address the sizable inventory, lenders hire companies that specialize in marketing these properties.

The FHA's new policy will permit the immediate sale of foreclosed properties by these firms to legitimate borrowers wishing to use FHA-insured financing.

The FHA, a federal mortgage guarantee program established in the wake of the Great Depression, is designed to help put owners in homes with less costs and less risk by providing a self-funded government guarantee.

The latest policy is intended to help stabilize neighborhoods experiencing high rates of foreclosures by reducing the inventory of unsold property.

"It's reasonable and appropriate that these firms have the ability to sell properties to borrowers using FHA financing," the Department of Housing and Urban Development statement said.

Tools: