This little article will make the day for a lot of investors, and it is good news all around. The aim is to have more incentive for buyers/investors of homes in distressed areas, hopefully to fix them up so that they can re-sell these gems for a small profit but still priced reasonably and in a manner that a first-time home buyer can afford them and still qualify for the more easily attainable FHA financing.
I think this is a wonderful shot in the arm. Most first-time buyers, while full of gumption, likely do not know a whole lot about making a major rehab on a house. I see homes daily where some poor soul has clearly gotten in over their head, ripping out carpet or taking baseboards off walls, and what is left at the end of the day is a house for sale that nobody wants, nobody wants to put money into in order to make it something somebody wants, or worse, it goes back to the bank (foreclosure). Another sad feature here is that the poor soul that embarked on this fiasco is out money either because they have caused the property to be unsaleable at the price they paid for it, they've spent money on supplies they don't know how to use or install, or they've ruined their credit for the forseeable future by letting it go back to the bank.
There IS a place for the investors who will put in the money to rehab these houses and make them move-in ready for someone else who is not so handy with tools. Now FHA is helping that process along by not causing a penalty to that following buyer who would also like the advantage of FHA financing.