Foreclosures dip in St. Louis region; HUD relaxes rules for quick resale

HUD’s actions will help speed foreclosure sales and protect against predatory flippers.

With the housing industry still facing recovery challenges in 2010, there is some good news in the St. Louis area. Foreclosure activity from December to January declined by five percent, according to RealtyTrac. This is the second straight month that action on foreclosed property decreased here. Nationally 23 percent of homeowners owe more than their house is worth, while in our area that total is 15 percent.

Considering the continued foreclosure crisis, neighborhood stabilization and access to affordable housing is on HUD’s fast track. The agency has expanded access to FHA mortgage insurance and allow for quick resale. This change is a temporary one but will give buyers the ability to resell the home within 90 days.

HUD secretary Shaun Donovan emphasized the new policy has very strict boundaries to make certain that predatory practices such as reselling at inflated prices to unsuspecting borrowers won’t happen. “The FHA has an opportunity to fulfill its mission by helping many homebuyers find affordable housing and contribute to neighborhood stabilization,” he says.

The criteria is limited to these general factors:

• All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
• In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions.
• The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage for purchase program.

Learn more about this opportunity. Contact your St. Charles County Real Estate SCHNEIDER agent and visit the HUD website for detailed information.

Written by Myra Vandersall

New and Improved Tax Credit for First Time Home Buyers

HUD: Tax Credit Can Be Used on Closing Costs FHA-approved lenders received the go-ahead to develop bridge-loan products that enable first-time buyers to use the benefits of the federal tax credit upfront, according to eagerly awaited guidance from the U.S. Department of Housing and Urban Development on so-called home buyer tax credit loans that was released today.Under the guidance, FHA-approved lenders can develop bridge loans that home buyers can use to help cover their closing costs, buy down their interest rate, or put down more than the minimum 3.5 percent.The loans can't be used to cover the minimum 3.5 percent, senior HUD officials told reporters on a conference call Friday morning. Thus, buyers applying for FHA-backed financing with an FHA-approved lender that offers a bridge-loan program can get a bridge loan to bring down the upfront costs of buying a home significantly but would still have to come up with the minimum 3.5 percent downpayment.There remain many sources of assistance for buyers needing help with the 3.5 percent downpayment, including many state and local government instrumentalities and nonprofit lenders.In addition, some state housing finance agencies have developed their own tax credit bridge loan programs, so buyers in states whose HFAs offer such programs can monetize the tax credit upfront to cover all or part of their downpayment. These programs are separate from what HUD announced today. The first-time homebuyer tax credit was enacted last year--and improved upon earlier this year--to help encourage households to enter the housing market while interest rates are low and affordability is high. The credit is worth up to $8,000 and is available to households that haven't owned a home in at least three years. The credit does not have to be repaid, and is fully reimbursable, so households can get their credit returned to them in the form of a payment.Learn more about the credit, including how to apply for it this year even if you've already filed your taxes, at REALTOR.org.Source: Robert Freedman, REALTOR® Magazine Online