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In the face of an unprecedented surge in foreclosures, the Federal Housing Administration has waived their 90 day requirement for homebuyers. Previously homebuyers had to wait 90 days for a home to be approved for financing to stop flippers from using FHA loans.

The infusion in FHA loans will provide another pillar for the market to regain it’s balance. The glut of foreclosures has been bringing down the market the past year, that is obvious.

Getting financing on a foreclosure has been difficult with the FHA restrictions and other financing hurdles. This has limited the potential buyers of foreclosures and thus accelerating the decline in property values in the surrounding community. When only the investor class can buy foreclosures you have a limited pool of buyers.

With the additional capital the FHA brings these homes should have more buyers of these homes, more velocity in the local housing market, and a higher bottom of the market. All these factor should help the hardest hit communities from the foreclosure mess.

For one year, the Federal Housing Administration (FHA) will insure foreclosed properties marketed and sold by property disposition firms on behalf of lenders. The properties, which must purchased by owner-occupants, will no longer be subject to the customary 90-day waiting period.
“A glut of foreclosed and abandoned homes harms neighborhoods, frustrates homebuyers and delays a community’s recovery,” said Brian D. Montgomery, Assistant Secretary of Housing-Federal Housing Commissioner. “The action we take today will allow homebuyers to purchase these homes in much greater numbers and ease the excess supply of unsold homes in neighborhoods across the country.”
FHA’s new temporary policy will help stabilize neighborhoods experiencing high rates of foreclosure by reducing the inventory of unsold properties. Many foreclosed properties remain vacant for months, inviting vandalism and reducing values of surrounding homes. To address that sizeable inventory, lenders have hired companies that specialize in the marketing and disposition of foreclosed homes. It’s reasonable and appropriate that these firms have the ability to sell the properties to borrowers using FHA financing. via HUD

Hattip Bob Carney and his Focus on Fredrick site!

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5. Top 10 Worst Metro Regions For Foreclosures in 3rd Quarter, 2008