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How Fast Can FHA Finance?

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Posted On: 03/23/2011

QUESTION:

Is it true that the government now allows FHA financing for quickie real estate sales?

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ANSWER:

For several years the government refused to allow FHA-backed financing for buyers in situations where a property had been sold within the past 90 days. The logic was that quickie sales have been associated with illegal flipping and by refusing to make purchaser loans available in such situations the government could do much to stop illicit transactions.

The problem is that a quick sale and resale also can occur lawfully, such as when a contractor or investor fixes up a property and then offers it for resale. In early 2010, HUD temporarily waived the 90-day anti-flipping rule through Feb. 1, 2011. Now the waiver has been extended again, this time until Dec. 31, 2011.

The FHA reports that during the 2010 waiver period it financed 21,000 mortgages worth $3.6 billion that would not have qualified for an FHA loan under the 90-day prohibition. At a time when the country has a huge surplus of unsold homes – an inventory that holds down local home values – the ability to remove 21,000 properties from the marketplace should be seen as a positive result.

QUESTION:

Although we live in a major metropolitan suburb, we have frequent electrical outages in our area. Should we get a full-house back-up system?

ANSWER:

Your utility is a regulated monopoly, meaning you cannot get power from other utilities. In exchange for their monopoly the local electric company must provide consistent electrical power at the lowest possible rates.

Before spending a dime, first strongly complain to state and local officials. More system maintenance, healthy fines and a limit on dividends and executive bonuses might work wonders.

Of course, the issue is different, for instance, if you need back-up power to run life-sustaining equipment. Then you need an on-site generator in case the general system fails.

Peter G. Miller is the author of The Common-Sense Mortgage and a veteran real estate columnist. Have a question? Please write to peter@ctwfeatures.com.

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