FHA Will Temporarily Lift A 90-day Waiting Period For Property Resales

In an effort to stabilize declining home values in certain neighborhoods, the Bush Administration today announced a temporary policy that will extend government-backed mortgage insurance and allow for the immediate sale of vacant foreclosed properties.

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.

With certain exceptions, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. This prohibition is intended 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. FHA’s new policy will permit the immediate sale of foreclosed properties to legitimate borrowers wishing to use FHA-insured financing.

March 2008 LoanPerformance Home Price Index

3-Month and 12-Month Change By Top CBSAs (Core Based Statistical Areas) as of March 2008
	3-Month	12-Month
	Change	Change
Los Angeles-Long Beach-Glendale, CA	-7.41%	-21.19%
Cleveland-Elyria-Mentor, OH	-7.38%	-11.77%
Oakland-Fremont-Hayward, CA	-7.33%	-19.87%
Cape Coral-Fort Myers, FL	-7.26%	-20.70%
Riverside-San Bernardino-Ontario, CA	-7.09%	-22.74%
Tampa-St. Petersburg-Clearwater, FL	-6.90%	-16.46%
San Diego-Carlsbad-San Marcos, CA	-6.82%	-19.02%
Miami-Miami Beach-Kendall, FL	-6.77%	-16.52%
St. Louis, MO-IL	-6.69%	-6.62%
Fort Lauderdale-Pompano Beach-Deerfield Beach, FL	-6.01%	-18.39%
Honolulu, HI	-5.48%	6.38%
Phoenix-Mesa-Scottsdale, AZ	-5.43%	-17.74%
Las Vegas-Paradise, NV	-5.11%	-17.86%
Boston-Quincy, MA	-4.99%	-10.35%
Detroit-Livonia-Dearborn, MI	-4.82%	-5.30%
Orlando-Kissimmee, FL	-4.69%	-16.18%
San Francisco-San Mateo-Redwood City, CA	-4.47%	-12.86%
Denver-Aurora, CO	-3.86%	-8.74%
Washington-Arlington-Alexandria, DC-VA-MD-WV	-3.66%	-12.65%
Chicago-Naperville-Joliet, IL	-3.53%	-7.55%
Atlanta-Sandy Springs-Marietta, GA	-3.46%	-7.58%
Charlotte-Gastonia-Concord, NC-SC	-3.20%	-1.35%
Minneapolis-St. Paul-Bloomington, MN-WI	-2.48%	-8.87%
Edison, NJ	-1.72%	-4.98%
Portland-Vancouver-Beaverton, OR-WA	-1.32%	-3.03%
Philadelphia, PA	-1.06%	-1.67%
Austin-Round Rock, TX	-0.90%	4.40%
Salt Lake City, UT	-0.70%	5.27%
Seattle-Bellevue-Everett, WA	-0.62%	-3.80%
San Antonio, TX	-0.11%	4.38%
Dallas-Plano-Irving, TX	-0.06%	3.38%
Houston-Sugar Land-Baytown, TX	0.00%	2.23%
Raleigh-Cary, NC	0.05%	0.83%
New York-White Plains-Wayne, NY-NJ	0.26%	-3.58%

Source: First American CoreLogic, LoanPerformance HPI, Single Family Detached Series as of March 2008