Most home buyers don’t know what many investor buyers have faced for years: the requirement from FHA that a house be “held” by an investor for 90 days before being resold.  For an investor who wants to buy a foreclosed property, fix it, then resell it or “flip” it, this requirement adds thousands of dollars in costs that come out of the investor’s pocket.

FHA announced it is temporarily lifting this restriction–with some qualification–in order to allow buyers to more easily purchase homes being sold as a result of foreclosure.  This is a good move on the part of FHA.  It is good news for the real estate market in general.  From what I’m hearing, we are likely to be seeing foreclosures continue to flood the market.

Doing away with the 90-day requirement will help the coming trend that shows the foreclosure problem is beginning to move up market as well.  As more “middle class” owners face layoffs and unemployment, higher priced homes are coming on the market as foreclosures.  For an investor, the higher value in a house the greater the risk of loss and the more need he has to fix it and sell it quickly.  These new guidelines will allow investors to fix and flip these higher value homes.

There are some restrictions aimed to limit the predators while allowing legitimate investors to show how they increased the value of a property and justify their profit.  This new p0licy will likely not get the media attention the tax credit received, but I believe it may prove to be as effective at helping the market absorb the continued flood of foreclosures.

Click HERE for the full report on the HUD website.

Specific details of this temporary policy are available on the HUD website.