A Healthy FHA Program Equals A Healthy Housing Market

The Federal Housing Administration has announced a sharp rise in delinquencies for FHA backed loans.  There had been some hope that the amount of delinquencies were on the decline earlier this year; but those hopes are being dashed as new numbers indicate that FHA delinquencies  have increased from 3.8 million to nearly 5.7 million.

Considering that FHA loans by Fannie Mae and Freddie Mac account for over 90% of the housing market, the health of this program will determine the health of the overall housing market. Currently we are facing a possible surge in foreclosures coming over the next few years that could offer opportunities for some REO investors. However, there is a tipping point where the number of foreclosures can become so numerous that they present an obstacle for REO investors who want to flip properties in a short amount of time. In circumstances such as these when there are too many properties at stake, thus For handling property people must rely on or appoint an expert by availing the services of top property management companies.

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With foreclosure inventory that could take years to clear unless banks get creative about tackling foreclosure backlogs, REO investors are facing waiting a few years in some markets before they can see a significant return on their investment. A matter of fact, depending on where an REO investor is buying, they could face a loss if foreclosures in the locale are extremely high.

For REO investors, the FHA foreclosure crisis could serve as a barometer for the health of a community’s housing market. Before investing, find out how bad
delinquencies are in the community. If delinquencies are high, by the time you flip your REO property, you could face a deluge of new foreclosure properties hitting the market which could reduce the amount for which you can sell the property.

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