The Federal Housing Authority (FHA) has finally figured out that the private investors in the US are the ticket to bail out the distressed homeowners in ‘underwater’ FHA guaranteed mortgage loans and short sales for the current mortgage crisis. Long viewed as the evil in facilitating investment in distressed properties, they are now recognized as entities that will move the short sale process forward. The FHA now recognizes that private investors are capable of an efficient remedy to our current ‘underwater’ mortgages.
The FHA has now waived their 90-day restriction on selling a house after a short sale, or any other distressed property purchase. Specifically this requirement is 24 CFR 203.37a(b)(2). This waiver is effective immediately and lasts until Feb 1, 2011.
Combined with the extension of the $8000 tax credit for first time home buyers and this promises to move a long list of distressed properties to new home ownership and avoid the growing number of vacant and therefore at-risk properties.
Given the overall US lenders’ reluctance to grant mortgage loans to all but the most pure credit worthy clients, this waiver promises to benefit the usually less credit-worthy home buyer.
There are conditions that will restrict the fast and loose investor. The new seller/owner must prove title to the property. This will prevent the ‘same-day’ or double close so in vogue with transistional funding investors. It’s estimated that the investor will have to hold the property for at least two weeks to enable title work to be filed and recorded. Still, two weeks is much better than the 90 days that investors have struggled with since the early eighties when this rule was conjured up to eliminate the exploitative ‘flipping’ practice so prevalent at the time.
The original rule was passed so that unethical inflation of property values and ‘gold-mining’ of fake property valuations was eliminated. With current bank-owned real estate inventories ballooning to critical levels, the private investors of the US are recognized as a valuable tool to move these vacant, unoccupied ‘troubled assets’ to home ownership for prospective and FHA qualified buyers.
Buyers and sellers in what is referred to as an A-B, B-C transaction (B representing the investor) must be at ‘arms-length, or no relation. No fair selling to your close relatives as an investor.
Investors on the ‘B’ side cannot show a pattern of ‘flipping’. Investing and flipping of FHA properties cannot be a business. The property must be a primary residence of the ‘B’ side investor. Assuredly this will necessitate some proxy residents. Proof of residence will be required.
And here is the most serious qualifier: If the resale is 20% higher than the investor’s purchase price, certain safeguards must be met. Basically, the investor has two weeks to prove that the property has increased in value more than 20 percent. This will allow the investor to increase the eye-appeal of the property to whatever level, and take as long as they need to, to make it an appealing buy.
If the resale price is 20% higher than the investor’s purchase price, the investor or distressed homeowner will have to pony up some proof to an independent appraiser that renovations and repairs justify the higher price. That’s just good standard practice to have as a flipper today anyway. This may easily trigger a second appraisal. If duplicate appraisals are required, they must be consistent. Of course this is the critical requirement that should prevent the dishonest price inflation that prompted the original ‘flipping’ restriction in the first place.
There are minimum inspection requirements for the property. Investors will be encouraged to include as many closing costs as possible in the A-B transaction.
This YouTube video says it all. Go here: How to Get A Beneficial Mortgage Modification Now Please ‘Like’ the video, will you? That makes it easier for others to find.
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tags: do it yourself short sale, rest report, avoid foreclosure, stop foreclosure, prevent foreclosure, foreclosure alternatives, self negotiated short sale, negotiate short sale, investor negotiated short sale, discharge mortgage deficiency, homeowner negotiated short sale, hafa, home affordable foreclosure assistance,negotiate mortgage deficiency, federal housing authority
Originally posted 2010-01-17 07:14:50. Republished by Blog Post Promoter
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FHA waives ‘flipping’ restriction for a year – http://t.co/eisjJFmN