In order to help deal with these issues, HUD has come up with a short-term policy that will aid in speeding up the sale of properties that are in foreclosure. As a part of the Administration's pledge to focus on foreclosures, grants will be available to neighborhoods as well as some developers via the Neighborhood Stabilization Program to fight the negative ripple effect of deserted homes.
At this time, the FHA usually does not allow a seller who has only been an owner of the property for ninety days or less to obtain a mortgage. Information gathered reveals that often the buying, refurbishing and placing a property on the market in order to re-sell it will take less than ninety days. Not allowing prospective FHA purchasers to buy these quickly "flipped" homes prior to the ninety day minimum reduces the number of homes that they may be able to purchase. The seller is reluctant to accept an offer from an early FHA buyer due to the cost of holding on to the property for more than ninety days as well as the risk of damage being done to the home by vandals.
This new policy will enable purchasers to use FHA insured mortgages to buy a variety of properties, including those owned by banks, HUD, or private parties. This will speed up the selling of properties which will result in a stabilization of local real estate values as well as revive communities.
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