FHA fell below is legislated requirement to have 2% in excess capital for reserves above and beyond forcasted losses. Being below this 2% requires the FHA, by law, to make changes to get the funds reserves back over 2%.
Virtually all of the losses are from 2006, 2007, and 2008 book years. These are the worst years in the housing crisis from an origination standpoint and they contained programs like the SFDPA (seller funded downpayment assistance) that have extremely high default rates.
The changes announced today will get the reserves up and put in place some controls to protect the fund and FHA for the long term, while making sure not to overly, adversely, impact this housing market at a critical time.
HUD Expands Waiver for Anti-Flipping Rule
The US Department of Housing and Urban Development (HUD) announced that it is temporarily expanding the property flipping waiver to include investors and entities that purchase foreclosures either singly or in bulk for resale.
Under the waiver, homes that were foreclosed on and are being sold by the mortgagee or on its behalf may be purchased by FHA borrowers without regard to the 90-day seasoning period. NAR worked with the California Association of REALTORS® and FHA to expand the waiver. HUD first announced the waiver on June 9, 2008, and the waiver was to be in effect for only one year.
HUD exempted from the property flipping rules properties sold by HUD through its Real Estate Owned activities, new homes being sold by builders and properties being sold by relocation companies and the property owner's employer as part of a job relocation. HUD later extended the waiver through May 10, 2010.
Under the waiver, homes that were foreclosed on and are being sold by the mortgagee or on its behalf may be purchased by FHA borrowers without regard to the 90-day seasoning period. NAR worked with the California Association of REALTORS® and FHA to expand the waiver. HUD first announced the waiver on June 9, 2008, and the waiver was to be in effect for only one year.
HUD exempted from the property flipping rules properties sold by HUD through its Real Estate Owned activities, new homes being sold by builders and properties being sold by relocation companies and the property owner's employer as part of a job relocation. HUD later extended the waiver through May 10, 2010.
Record Number of Foreclosures in 2009
Total foreclosures in 2009 reached 2.8 million, a 21 percent increase over 2008 and a 120 percent rise compared to 2007, according to foreclosure sales web site RealtyTrac in a year-end report released Wednesday.
California, Florida, Arizona, Illinois account for 50 percent of all foreclosures.
California, Florida, Arizona, Illinois account for 50 percent of all foreclosures.
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