How To Buy Foreclosure: Updated February 2010

How to buy foreclosures in today’s economy. We’ll as you all know I have many many years of experience with FHA Loans. I just saw a really interesting post that I actually think is going to help our neighborhood’s.

Starting today home “Flippers” are now welcome at the FHA.

That’s right, with a glut of foreclosures plaguing the nation’s neighborhoods, the FHA is temporarily removing restrictions on investors who buy and sell homes within 90 days.

It’s just for one year, but Flippers are no longer persona non-grata with the government.

“FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties,” FHA Commissioner David Stevens wrote in a statement last month. “This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity.”

So the FHA wants to encourage flipping and turn first-time buyers, who are already getting a tax break, into new real estate speculators? Nope, they just want to get as many foreclosed properties as possible off the market. This opens up a whole new bundle of buyers to current real estate investors who previously couldn’t flip the home to a low-income borrower.

The FHA is lifting the ban for just one year and there are some rules.

Here’s why.

1. FHA Guidelines are alot more complete that a few years ago with sub-prime investor loans, and purchase-rehab loans.
2. Our neighbors are really going to be able to get revitalized because now that you have added the incentive for an individual to make a profit, it changes the ball-game.
3. With FHA 203k… if the rehab loan is above $35,000 then it’s no longer considered a streamlined (k), and a consultant needs to step in. Which will insure that people aren’t just buying these home and getting the rehab money and then running off with the cash.