HomeLoans Blog

Several blogs and newspaper articles have reported a temporary suspension to the FHA flipping rule. This is very good news to our local Chattanooga market, where foreclosure inventory is building.

The result should be that there will be more qualified buyers and that lenders will be able to make property repairs with FHA approval in mind.

Both of these influences should help sustain our area property valuations.

Foreclosure sales of property in poor condition tend to drive down valuations. And lenders have not had the motivation to make repairs because they could not sell with FHA financing anyway.

The first blog I read this in was http://www.activerain.com/blogsview/553519/We-Can-Flip-Bush .

I verified the change with these articles at CNNMoney.com and Zimbio Business .

I have also posted comments on this in my other blog at http://www.activerain.com/blogsview/553662/FHA-suspends-property-flipping .

This is a significant policy change that is designed not to help investors flip houses, but to help ease the pressures of increasing foreclure inventory.

FNMA, FHMLC, federally chartered banks and other government related lenders have always been able to obtain a waiver to the FHA flipping rule. Now other lenders will also be able to sell their inventories with FHA financing.

In our local Chattanooga market this will help keep high foreclosure inventories from pushing down property values. Lenders are now encouraged to perform property repairs so that the homes will pass FHA standards.

With the new ability to sell with FHA financing, including down payment assistance and full 6% seller concessions, lenders will have many more buyers who are qualified to purchase.

This is generally good news. I will continue to check for more details.

Here is a link to the actual HUD order.