New FHA policy could curb vandalism
Published June 16, 2008 by CSBJ Staff
The Federal Housing Administration has implemented a temporary policy that extends government-backed mortgage insurance and allows for the immediate sale of vacant foreclosed properties.
The vacant properties can be problematic for neighbors because they attract vandalism that can deplete nearby home values.
For one year, the FHA will insure foreclosed properties that are marketed and sold by property disposition firms on behalf of lenders.
If purchased by owner-occupants, the properties will no longer be subject to the customary 90-day waiting period.
The temporary policy is designed to help stabilize neighborhoods that have high foreclosure rates, by reducing the inventory of unsold properties.
The 90-day waiting period was enacted during 2003, to prevent property “flipping” and predatory lending by prohibiting insuring a mortgage on a home owned by the seller for less than 90 days.
The FHA’s new policy will permit the immediate sale of foreclosed properties to legitimate borrowers wishing to use FHA-insured financing.
Filed under CSBJ Daily, Housing Market