FED FORECLOSURES NOT FOR FLIPPERS ANYMORE
Foreclosures are already hard enough to find. There are virtually none in Chicago’s market right now. The default rates have been low. Very low. This is why so many of my “flipper” clients who like to buy fix and flip are in need of projects right now. Well investors are now handicapped further with a rule change.
The delay to favor homeowners was a shorter period of time before - now it is going up to 30 days.
A lean away from flippers has happened. This should do a little to make it easier for a buyer to obtain a home. When you see a foreclosure online and are an investor you have to factor this into your plans to buy. This week the Federal Housing Administration said upped their favor to non-investors. It said that nonprofit organizations as well as owner-occupant buyers have first advantage on foreclosed properties by a greater stretch than before. It will delay investors ability to purchase via it’s Claims Without Conveyance of Title (CWCOT) program, by prioritizing these groups over investors. The delay to favor homeowners was a shorter period of time before - now it is going up to 30 days.
RULE: For the first full 30 days, a foreclosed property listed for sale can only be bid on by owner-occupant buyers, approved nonprofits, and government entities, the FHA announced last week. The administration added that these buyers would also enjoy an additional 60 days for conveyance from the date that the sales contract is ratified.
The Biden-Harris administration said this action will increase the supply of single-family homes available to families versus investors/flippers. Typically, FHA-insured foreclosed properties are snatched up by large investors and turned into rental properties.
“This policy change is critical as the nation continues to address the challenges of a real estate market in which home prices are high and the availability of affordable housing supply is low, making it difficult for individuals and families to achieve the dream of homeownership,” said Principal Deputy Assistant Secretary for Housing and the Federal Housing Administration Lopa P. Kolluri.
