FHA Eases Requirements on Mandatory Repairs

Buyers often find themselves in a catch 22. They find a house that they can afford but it needs repair, which is why it is priced low enough for them to even look at in the first place. The repairs are identified, the buyers are ready and willing to make the repairs but FHA or VA will not allow the buyer to participate in the repair work and seller is unwilling to make them. What is a buyer to do?????

This article in Realtor Magazine is good news for FHA buyers, we can only hope the VA follows suit.

FHA Eases Requirements on Mandatory Repairs

(January 13, 2006) -- The Federal Housing Administration hopes that easing rules on property conditions and mandatory repairs will allow the agency to reclaim a larger share of the overall housing market.

Lenders, real estate professionals, home buyers, and sellers should welcome the move because it will now allow a mortgage to close on a previously owned home even if minor defects—such as leaky faucets, cracked sidewalks, soiled carpeting, and missing handrails on stairways—have not been fixed beforehand. The mandatory repair rule for FHA loans—which turned many away from the agency—now will apply only to more serious defects such as structural problems, foundation damage, poor roofing, and electrical hazards.

The FHA currently has a 3 percent share of the mortgage financing market, compared with 11 percent less than a decade ago; but the change might allow the agency to loosen the grip that subprime lenders have taken on first-time, moderate-income buyers.

Source: New London Day (CT) (01/13/06); Harney, Kenneth

1 comment:

Robyn Spoon said...

The new changes to the FHA guidelines is a welcome change. I think it will not only simplify the FHA process, but allow more sellers to feel comfortable accepting an offer including FHA. Great info!