FHA Lifts Anti-Flipping Ban – According to National Mortgage News, effective February 1 FHA is temporarily lifting their “anti-flipping” rule that prohibits FHA financing on purchase transactions where the seller has owned the property for only 90 days. HUD found this policy blocked potential FHA borrowers from taking advantage of quick resales of real estate owned. Savvy REO sellers are reticent to sell to FHA borrowers because of holding cost and vandalism risk during the 90-day holding period. FHA is lifting the 90-day rule for one year. All sales must be arms-length transactions with no evidence of flipping in the previous 12 months. If the resale price is 20% higher than the REO sales price, the lender has to provide supporting documentation and a second appraisal in some cases.
Big Banks’ Big Las Vegas Adventure – Bank of America expects to release about 6,000 foreclosed properties into the Nevada housing market in 2010, or about 500 a month, according to a report in the The Las Vegas Review-Journal. The homes are part of a “phantom inventory” of foreclosed units being held by banks as they work through loan modifications and negotiate short sales.
What do you think this will do to home prices in Las Vegas?
Countrywide, it is estimated B of A will be taking back at least 11,000 homes per month the early part of this year with predictions of over 40,000 homes taken back in November and a similar number in December.
What does this mean for you? Expect home prices in the hardest hit regions to stay where they are or take another dip. It could many years for all foreclosed and distressed property to be absorbed and residential real estate values to return to something more normal.
Bottom line, now is a good time to buy a house.
Does anyone besides me see a correlation between Big Banks’ REO dilemma and the lifting of the FHA ban on flipping?