The Federal Housing Administration is offering an exclusive look at foreclosed properties to owner-occupant buyers, government entities, and HUD-approved nonprofits.
The 30-day exclusive period will give such buyers an opportunity to bid on foreclosed properties before investors. This also gives buyers more time to secure financing for the sale.
“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,” says Lopa P. Kolluri, principal deputy assistant secretary for housing and the Federal Housing Administration. The policy change is part of a mortgagee letter recently issued by FHA called “Expanding Affordable Housing Supply Through FHA’s Claims Without Conveyance of Title.”
The FHA says the change is to support the administration’s goal of ensuring more single-family properties go toward homeownership than to investors who turn the homes into rentals.
To participate, owner-occupant buyers must provide a signed statement that they intend to use the property as a principal residence. Nonprofit buyers must be preapproved by HUD. Government entities must provide a signed statement on their letterhead stating they are in fact a government entity.
Contracts for the properties also include a chance to withdraw if purchasers get buyer’s remorse: Buyers are given a minimum of 15 days after the date of the sales contract ratification to cancel the purchase if there is an issue with the property's condition.