The government is continuing its support of the housing market recovery by continuing to allow investors to buy and sell foreclosed properties at a quick profit.
In May 2010, the Department of Housing and Urban Development waived the Federal Housing Administration restriction against insuring loans on properties that were acquired within the prior 90 days.
The waiver encouraged investors to acquire foreclosed properties, fix them up and flip them for a profit in a relatively short period of time.
This past January, the waiver was extended until Dec. 31, 2011.
Since it was enacted, the waiver has enabled more than $7 billion in FHA financing on nearly 42,000 properties resold within 90 days.
In HUD Announcement No. 11-292, HUD said that the waiver will be extended through Dec. 31, 2012.
In order to qualify, all transactions must be arms-length. On loans where the property price has increased by 20 percent over the seller’s acquisition cost, the lender will be required to meet specific conditions and provide justification for the appreciation.
“This extension is intended to accelerate the resale of foreclosed properties in neighborhoods struggling to overcome the possible effects of abandonment and blight,” FHA Acting Commissioner Carol J. Galante said in the notice.
Home-equity conversion mortgages are not impacted by the waiver.
