Comment submitted by Candy Alstadt, Wells Fargo Home Mortgage

While the interim rule extending the exclusion to all other federal agencies appears to be a lift from the current HUD policy, it doesn?t give mortgage lending the lift the market really needs. Exclusions are needed for all bank owned foreclosures. Wells Fargo Home Mortgage recommends that the REOs of state-licensed, federally-chartered lenders or FHA-approved lenders be exempt from the 90-day rule. The intent of the 90-day rule is to prohibit property flipping. While there have been many flipping schemes, lending institutions have not been the culprit. A bank foreclosure may constitute a sale however it is not a sale for profit. By the time a lending institution is in a position to sell the property it has lost months of mortgage payments, has incurred legal expenses, and is usually losing money on the sale. The current rule conflicts with HUD?s goals of increasing homeownership and revitalizing communities. By extending the 90 day rule to include the foreclosures of state-licensed, federally-chartered lenders or FHA-approved, lenders, HUD will increase lending opportunities in low to moderate (LMI) communities and expand homeownership. This will also encourage community revitalization in neighborhoods that are plagued with foreclosures.Lending institutions are looking to sell their foreclosures quickly and many times these properties are in need of repair. Many borrowers, who would otherwise be eligible for a 203k loan, are not able to proceed with the 203k loan due to the 90 day rule. These borrowers are then forced to look for other loans or other properties. They may qualify for a 203b loan, but then can not make the desired improvements to the property. They may qualify for conventional lending, however in most cases the terms are sub prime due to the property condition. More often, the property is sold to an investor for cash. This approach does not promote owner occupancy nor does it promote revitalizing communities. Wells Fargo Home Mortgage