U.S. extends FHA program for flipped houses

By Reuters
Posted Jan. 28 at 3:18 p.m.

The Obama administration on Friday extended through the end of the year a popular program allowing buyers of flipped homes to obtain loans backed by the Federal Housing Administration.

Flipping refers to the practice of buying a home and quickly reselling it at a profit. The FHA in 2003 banned buyers from obtaining government-backed mortgage insurance on homes bought less than 90 days after a previous sale.

The FHA temporarily lifted the ban a year ago to help investors sell foreclosed properties ito aid the depressed housing market. That waiver was set to expire Monday.

“This action enables our borrowers, especially first-time buyers, to take advantage of this opportunity and buy a home that has recently been rehabilitated,” said FHA Commissioner David Stevens. “It will also help to move more foreclosed properties off the market and reduce the number of vacant homes in neighborhoods throughout this country.”

The FHA has insured more than 21,000 mortgages worth more than $3.6 billion on properties resold within 90 days of acquisition since last February, when the waiver was issued, the agency said.

Mortgage lending is still very tight and loans backed by the FHA, which guarantees them for borrowers who meet certain restrictions, are the only option available to many borrowers.

The Mortgage Bankers Association earlier this week said it sees U.S. residential mortgage lending falling below $1 trillion this year to levels not seen since 1997.

FHA-backed loans accounted for about 34 percent of mortgages used to purchase a home in 2010, according to industry publication Inside Mortgage Finance.

The move comes just weeks before the Obama administration is expected to unveil its proposals for overhauling the U.S. housing finance system, including what to do about mortgage giants Fannie Mae and Freddie Mac .

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One comment:

  1. ejhickey Jan. 29 at 10:21 pm

    More help for speculators.