This is not an "informational piece" on how FHA has relaxed the guidelines. This is in depth real estate chat for: "Why did they do this and why did they do it for only 1 year?"
Basically true REO were exempt from the rule before (when a house went "back to the bank") but third party or private party investors who purchased property at the trustee's sales were not exempt. Read about the flipper and trustee sales if you aren't following me here..
For the Trustee Sale Flipper: this kept a solid 30% of their buyers out of the game. I have also been watching the sales types (trustee sale flips) gain steam through my BPOs.
What's going on here? Are the banks getting ready to dump some of that infamous "shadow inventory?"
Clearly this strategy of opening up 30% of the market to "The Flippers" will create furious bidding wars at the trustee sales thus driving up auction sale prices for the bank.
The banks would be able to completely dispose of their inventory and be done with it. This would, in turn, leave investors holding the bag this time around for declining market scenarios (falling prices.)
Banks will take their cake and eat it too. Screw the little guy. What a perfect set up, if shadow inventory does exist.
What say you? (fyi, this is not a "Republican" or a "Democrat" scenario, both love to enable big corps)