FHA Rules Changing to Reduce Home Inventory
The Federal Housing Administration (FHA) is changing rules that will hopefully ease the inventory of homes currently on the market. At this time, for a buyer to get a loan through FHA they can only buy homes that have been on the market for more than 90 days.
According to the Portland Oregon real estate blog named re:PDX,
Since 2003, properties financed with FHA programs could not be resold within the first 90 days of the loan term–a guard against predatory lending and flips with cursory rehabs. FHA is removing that anti-flip rule for a one-year period. Other conforming loan programs (Fannie Mae and Freddie Mac) never did adopt similar rules.
Real Estate Webmasters report,
Federal Housing Commissioner Brian Montgomery said “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”…
I’ve been reading mixed messages about how effective the move will be in helping the housing market recover, but according to CSBJ Daily reports, “The temporary policy is designed to help stabilize neighborhoods that have high foreclosure rates, by reducing the inventory of unsold properties.” They further state that “The vacant properties can be problematic for neighbors because they attract vandalism that can deplete nearby home values.”
PamJoanna highlights how FHA loans are making a strong comeback thanks in part to the availability of low down payments (3%), allowed gift money, and overall credit is reviewed rather than just FICO. Idaho lender Lisa Kratz is also pleased with FHA’s new rules, but warns,
FHA loans aren’t for everyone. While a borrowers’ credit does not have to be great, it does need to be decent. There are also qualifications that need to be met regarding debt-to-income ratio, and other limitations apply.
In my own world, three of four buyers I work with go with FHA loans so I appreciate the rules allowing them to buy the homes they love.
