San Diego real estate blog - Peter Toner

Looking to purchase a Foreclosure property? The Bush Administration’s latest announcement just made it easier. For the next year, FHA will be allowed to insure mortgages to purchase foreclosure properties that have been in the seller’s possession for less than 90 days.

Previously, FHA was not able to insure such homes with the intention of preventing “flipping” of homes in distressed neighborhoods. This same rule created a bit of a catch twenty two. The homes taken back by the lender would have to sit and sit creating a larger number of foreclosed homes that could not immediately be put back on the market for sale. The more vacant homes you have, the more the neighborhood value declines and the less likely buyers are going to come into the neighborhood in fear of living in a ghost town.

The Bush Administration’s decision to eliminate the 90 day rule is an attempt to help assist areas that have been hardest hit with foreclosed properties. As the number of foreclosures rise across the nation, it is a bit premature to say whether such a change will be able to make any kind of a positive effect on the market.