The Department of Housing and Urban Development or HUD has had a policy for years that stated no new home purchases are eligible for FHA insurance until a 90 day waiting period had expired (from the closing date). HUD has since adopted a “temporary” policy that allows new purchases of homes to take place within the 90 day time frame. According to HUD Secretary Shaun Donavan, “this temporary policy will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties. The announcement is part of the Obama administration’s commitment to addressing foreclosure.” At issue is the vacancy that occurs when a home is foreclosed. President Obama’s aim is to help the urban blight that is taking place in many cities due to the increase of empty houses. By changing its stance, HUD has actually done a great service to the potential homeowner and the neighborhood as well. The only snag may be with the large banks (B of A, Wells Fargo, Citi, etc) that aren’t under any mandate to accept the new change. But it seems unlikely that the new change will not be adopted by the banks because FHA is insuring the deals. Next week I will tackle how this change will affect REO sales, Short Sales, as well as conventional financing.

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