While the upswing in the number of short sales may put off some who wish to purchase a home purely
for the investment opportunity, a new policy from the FHA may prove to be beneficial to them.
The FHA has done away with one of their previous rules and will now be allowing government insured loans for homes that are bought and resold within ninety days.
Up until now, the FHA would not give mortgage insurance on homes that were resold in less than ninety days as a preventive measure against possible fraud. One of the fraudulent schemes was for an investor to buy a home, make some fairly unimportant repairs, after which it would be sold to a fraudulent buyer who had no intention of repaying the loan.
This sort of transaction falsely increased the price of housing and caused the FHA to experience exaggerated insurance claims. In addition many homes that had been bought and sold fraudulently were left vacant and often vandalized.
This new rule allowing homes to be purchased and re-sold in ninety days or less will be in effect for one year. This is being done as an acknowledgement of the part that investors have in the sale of foreclosed homes, rather than to aid a market that is determined by investors.
