I received a bulletin that announces that FHA is suspending the 90 day seasoning requirement that has recently prevented many first time home buyers from buying REOs from the bank.

Seasoning issues reflect to change in Title.

If a bank forecloses on a home and they repossess it, they have to hold on to it for 90 days before a person with an FHA loan could purchase it.

Likewise, an investor who bought a distressed property, fixed it up, has been required to hold onto it for 90 days before selling to a person with an FHA loan.

The 90 day rule has been temporarily suspended for REO properties.  At this point, I do not know if it is true for rehab properties, or simply REOs.  Lenders will still have to make all the repairs necessary for FHA “safe, secure, and sound” guidelines.

Source: http://www.inman.com/news/2008/06/13/fha-waives-90-day-waiting-period-resales

“The action we take today will allow home buyers to purchase these [REO}homes in much greater numbers and ease the excess supply of unsold homes in neighborhoods across the country,” said Federal Housing Commissioner Brian Montgomery in a statement announcing the change.

But because FHA also requires that homes purchased with loans it guarantees to be in “safe, secure and sound” condition, lenders still won’t be able to resell many of the homes they’ve foreclosed on to FHA-eligible buyers until they make the repairs needed to bring them up to FHA standards.

“It’s not going to have as much an impact as one would assume, because most of the properties aren’t going to meet FHA standards,” said Glen Daniels, director of real estate-owned properties for the distressed and foreclosed property listings site, Foreclosure.com.

Here are links to FHA appraisal and property requirements, including repair conditions.