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Government Took Rigid Stance to Address FHA Home Foreclosures Problem

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By : John Cutts    99 or more times read
In an effort to address the problem of FHA home foreclosures, the U.S. Federal Housing Administration (FHA) has announced that it will be issuing fresh guidelines that will impose tougher rules on homeowners with regards to payment of hazard insurance premiums and property taxes.

The rules are expected to impact all housing markets, including Florida. This could also have a significant bearing on Pompano Beach foreclosure investing, with homebuyers and investors expected to take note of these new rules before they go about purchasing residential properties in the area.

The FHA has been known to be lenient when it comes to delinquent insurance and tax payments, particularly to senior borrowers. However, the budgetary problem being faced by the agency allegedly forced it to reconsider its guidelines. The FHA is reportedly facing a budget shortfall estimated to be worth almost $800 million.

The shortfall is the first loss that the agency has recorded and is partly attributed to the declining prices of houses, particularly in hard-hit states like Florida. The decline in home prices has produced a big number of cheap houses in Florida, a development that the residential real estate industry is trying to come to terms with.

In conjunction with the planned changes in FHA home foreclosures guidelines, mortgage firm Fannie Mae has also instructed the firms that service its FHA reverse mortgages portfolio to be more vigilant and to implement tougher policies on insurance and tax delinquencies. The mortgage lender has reportedly instructed these companies to initiate foreclosure on borrowers who fail to pay their taxes and insurance premiums beyond the extension periods provided to them.

As the lists of foreclosure properties continue to expand in Florida and in the rest of the U.S., government agencies like the FHA and government-sponsored firms like Fannie Mae are left with no choice but to take additional steps to address the housing problem. According to real estate analysts, the tougher rules will put more homeowners at risk, including senior homeowners.

Analysts have also added that the expected changes in FHA home foreclosures rules will mean more homeowners who own reverse mortgages will be facing risks of foreclosures, particularly those who have lost their jobs and do not have the means to pay insurance premiums and taxes on time.

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