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Changes in FHA financing
Posted on February 2, 2010
Effective February 1, 2010 the FHA has lifted the 90 day resale restriction (the flipping rule) that made FHA insurance unavailable if the contract of sale... for the purchase of the property was executed within 90 days of the prior acquisition by the seller. There is some fine print, but this change opens up FHA financing to bank REOs and foreclosures that need fixing up before resale.
Other news of note:
Why are they doing this? With nearly 40% of all new home loan originations in 2009 done through FHA, the agency is under fire to reduce risk.
- Coming this spring (the exact date hasn't been announced), FHA borrowers will see their initial mortgage insurance premium increase to 2.25% of the value of the loan�up from 1.75% today.
- Another new rule (starting this summer) will decrease the amount a seller can give a buyer to help pay their closing costs. The maximum amount of assistance will drop from its current level of 6% to 3%.
Why are they doing this? With nearly 40% of all new home loan originations in 2009 done through FHA, the agency is under fire to reduce risk.
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