FHA-insured mortgage foreclosures in California are most often located in inland areas In the late 1990s through 2006, FHA permitted builders (and some MLS sellers) to advance the minimum 3.5% downpayment to marginal buyers on the least expensive homes in the state, in violation of specific FHA regulations against this Nehemiah financing. There is a reason the FHA is now doing a landslide business in foreclosures in the remote suburban areas, such as the central valleys. Thus, FHA suburban properties will most likely be resold at a loss for the communities that buy them. Worse yet, those with jobs in urban cities no longer need to travel to these outlying areas since cheap properties have become available closer to their current employment. Jobs in FHA foreclosure areas will trickle in very slowly. Homebuyers must eventually acquire these homes and that will require jobs. With an insufficient number of homebuyers to absorb the excess inventory, it is advantageous for FHA to sell them to communities who will buy and maintain the properties and take the risk of reselling them to homebuyers in the future.Ĭalifornia’s Central Valley region may find the purchase of FHA foreclosures by local agencies beneficial to their communities, but it will be for reasons which appear transitory. Brokers and agents are deliberately deprived of the ability to market these foreclosed homes to homebuyers.įor the FHA, the more deep-rooted issue is they have more homes than brokers have homebuyers at the prices FHA expects to get from these properties. NSP participants may use the NSP funds to finance the purchase of homes for use as rentals or homeownership.įirst tuesday take: The reason the FHA can offer a 10% discount is because they are circumventing the multiple listing service (MLS) path to homeownership and thus eliminating broker fees, closing costs and financing costs.
Property not purchased during the 14 days will be listed and sold to the general public according to standard procedures. Pulling from the FHA’s excessive inventory of foreclosed properties, NSP participants have an exclusive 14-day option after HUD/FHA acquires title to purchase these properties at a discount of 10% on the property’s appraised value.
NSP will sell Department of Housing and Urban Development (HUD ) foreclosed homes under the FHA’s First Look Sales Method, which grants first option and financing to purchase HUD foreclosed homes to state and local governments as well as NSP participating nonprofit organizations. Effective immediately, the Federal Housing Administration (FHA) has implemented yet another program to market foreclosed homes, this one called the Neighborhood Stabilization Program (NSP).
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