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FHA Insurance Sought As Bank and Fannie Mae Home Listings Expand

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By : John Cutts    99 or more times read
While the number of foreclosed residential properties under bank and Fannie Mae home listings continues to rise, more property developers in Colorado are looking at multifamily projects as a way to earn profit and at the same time, stabilize local communities. In addition, these developers are trying to achieve further security by seeking insurance from the U.S. Federal Housing Administration (FHA).

Housing market data shows properties under Denver foreclosure lists and other foreclosure area listings continuing to climb, making apartment housing and multifamily projects more attractive to developers. However, majority of developers are finding it hard to finance these projects, hence the increased demand for FHA insurance.

To avoid the fate of properties under foreclosure lists in Colorado, developers of multifamily dwellings are making sure that their projects are securely financed by the government. This trend is exhibited in the rising number of FHA loans applications from multifamily developers, with applications for 2010 recording an almost 70% increase compared with the 2009 period.

Housing industry observers are predicting that as long as foreclosed homes under bank and Fannie Mae home listings are recording increased totals, apartment projects will be the focus of many property developers and applications for FHA loans will continue to rise until the next year. They reveal that developers have more protection if their projects are FHA-insured.

Under the FHA loan insurance program, the U.S. Housing and Urban Development is responsible for paying 99% of the balance for a defaulting borrower. FHA involvement also makes banks more willing to issue loans since they have less to lose should the project end up in foreclosure properties listings.

So far, 100 property developers in the area have submitted FHA loan insurance applications. The number is almost double the 2009 figures when a total of 59 applications were submitted, while 2008 had a total of 44. Agency-insured loans have a total worth of $490.2 million for the year which is significantly higher than the 2009 total of $291.4 million.

The figure represents a total of 5,556 apartment units being built in the area. These multi-housing units are expected to accommodate rising demands for apartments, particularly now that majority of residents have no inclination to purchase houses for fear of losing them to foreclosure bank or Fannie Mae home listings.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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