New Jersey Foreclosures
Effective February 1, 2010, a new policy goes into effect that will speed the resale of foreclosed properties to buyers in New Jersey and other states.
To help achieve the national goal of stabilizing home values and improving conditions in communities where foreclosure activity is high, Shaun Donovan, HUD Secretary, announced a temporary policy that will permit FHA financing for foreclosure properties up for sale within 90 days of the foreclosure.
Prior to this policy change, FHA prohibited insuring a mortgage on a home owned by the seller for less than 90 days. This temporary waiver will give borrowers access to a large inventory of foreclosed properties. Due to the tight credit markets, FHA-insured mortgages are often the only means of financing available to many homebuyers.
The policy change is temporary. There will be very strict guidelines to insure program compliance.
Research has shown that acquiring, rehabilitating and reselling these properties to new homeowners can often take less than 90 days. Prohibiting the use of FHA financing for a subsequent resale within 90 days of acquisition adversely impacts the willingness of sellers to allow contracts from potential FHA buyers.
With this change, buyers can purchase HUD-owned properties, bank-owned properties, or properties resold through private owners.
The waiver will take effect on February 1, 2010 and will be effective for one year – unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of “flipping” where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following criteria:
- All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
- In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions.
- The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.
Specific conditions and other details of this new temporary policy are available on HUD’s website.
If you are looking to buy a bargain foreclosure or quick sale property and need a realtor to show you some homes, let me know. Buying now can get you a bargain price, a low interest rate, minimum down payment and a tax rebate.
Ask me about a little-known program that will let you buy a home needing repairs and get over $30,000 at closing to make repairs.
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{ 3 comments… read them below or add one }
why didn’t anyone tell me this? you say New jersey ?? but is it available in Georgia?
To the person asking about new jersey, the guy writing the article says “new jersey and other states”.
@HomeShopper99 – Since the majority of my business and focus is New Jersey, I write some posts with a NJ slant. But it’s FHA, so it’s available in other states as well. sidebar – Hey Callie, I’m a “gal.”