They’re hoping this will stabilize prices and stem the tide of foreclosure activity. So despite a home being neglected during possible abandonment it will still be possible to make quick work of them with this hurdle removed. Obviously they’re also hoping to curb dishonest property flipping which can catch unwary buyers, but it’ll be a test of the program to see if the guidelines are strict enough.

Some of the limitations include:

- if the sale price is 20% higher than the acquisition cost then a whole slew of new conditions must be met

- it’s limited to forward mortgages

- it doesn’t apply to the Home Equity Conversion Mortgage for purchase program

While it may be a small drop in the overall housing bucket the program has approved 42,000 mortgages since the beginning of 2010 which otherwise would have been rejected. It does not mean that those properties didn’t enter foreclosure at some later point, but the turnover in the market and its ability to deal with the foreclosure inventory should be some positive news for investors.

So don’t fret – try to find the deals that are staring you in the face. Don’t forget your dreams, don’t let lame excuses scare you off, and DO get up off the couch this year!

Today’s lucky (or unlucky) government agency is . . . the FHA!! Not only have their cash reserves dropped below $2.6 billion (slightly below mine, btw) but there’s a good shot they’ll be asking for a bailout within the year. The fact that reserves are low is actually nothing new; it’s been below the 2% minimum for 3 years running. And you know what? I don’t even blame them for needing a bailout. It’s not like they control the housing market or home prices. (They may have helped cause the mess in the first place but let’s not get picky.)

What gets me is that the government is actually going to give them the cash. Toss money into a poorly run, losing proposition. If you don’t have the guts to step back and take a stand then you shouldn’t be in the game in the first place. If no one in Washington can just admit that there’s something fundamentally wrong with the system then I think they’ve got their heads in the sand.

I give the FHA full credit for doing their best to stay afloat. It’s really not their job to try and make a difference (I guess). But it is our representatives’ job. If I can see the problem and you can see the problem, then why can’t the people who are actually there to do something about it?

Hey, Washington, don’t make me come up there!

Fannie Mae
Freddie Mac
Federal Housing Administration

Um, do I need to repeat those names for you? Those groups currently hold 250,000 REO homes and they’ve thrown up their hands and said they have no idea what to do with them. I’m telling you the complete honest truth here. They are finally willing to openly admit that big government does not have the answer and this inventory of foreclosures and troubled mortgages is going to swamp the market.

So they’re appealing to anyone, including myself, to try and help them come up with ideas of what to do with these properties. Their best idea: rentals. They think property managers who might want to pick up whole pools of properties will maintain and upkeep the properties and keep them from rejoining the already swollen market.

I’m flattered that the government has decided to finally listen to our advice and believe me I’ve got plenty on my mind to tell them. I’m happy to let you get in on the secrets I’m going to be sharing with them. And really, you guys out there have the power to be the solution. Let’s keep the discussion going, leave your comments, and I’ll be sure to pass them along when I become an FHA consultant. Ha ha, just kidding, they couldn’t afford my rates, not in this economy anyway.

Keep it real guys and remember, if Washington is beginning to see clearly, you must be miles ahead of them.

And more government programs are on the chopping block. The Emergency Mortgage Relief Program for unemployed homeowners, the Home Affordable Modification Program (HAMP), and HUD’s Neighborhood Stabilization Program are all slated to be discussed (and let’s face it, probably ended) during Congress’ next sessions.

However, Obama has announced he’ll veto any moves to end programs he considers necessary. So the future of these programs remains in doubt, despite whether the programs are proving to be effective. Each of these programs has had its ups and downs but Congress needs to move away from these programs that were temporary measures to something more sustainable.

The housing recovery is still not where it needs to be but it’s also not at the stage it started at more than a year ago. So these programs need to be either done away with or revamped to address the new issues that have come up. Let’s hope everyone up in Washington can look the facts right in the eye and make the right decisions.

I know what you’re saying: Cory, that was 2 questions, not one! And you’d be right. But you know what, it’s almost the weekend, the news from Washington is annoying, and I’m already thinking about tomorrow. So what’s the bottom line – quick, purposeful debates or mindless arguing?

I think we’d all like to believe that the politicians up in Washington are really hoping to convince each other to agree with what they have to say. But it’s just not the case. Take the latest debate for instance: Should the government end FHA’s Short Refinance option? This program, which allows underwater homeowners to lower their principals and interest rates to manageable levels, have been extremely controversial, and its success is hard to measure. On paper, though, it does seem to make a lot of sense. Since some lenders stand to lose more from a foreclosure than from allowing the tenants to stay in the home, why not offer a middle option where the lender takes a loss?

The major issue at stake is not necessarily the cost or the effectiveness, but rather the participation. Only 245 cases have been requested, which some argue just doesn’t justify having a program at all. (I’d argue that to the people who want to stay in their homes that about as good a justification as you could ask for, but don’t expect a politician to see that.) But, of course, winding down even the smallest program becomes an endless cycle of debates and name-calling. By blowing the entire issue out of proportion, the lines that divide our country are just becomes clearer and deeper. That doesn’t do anyone any good. So let’s do what we can to convince Congress that we’re sick of “arguing for arguing’s sake” and begin to move forward together. I’m not sure we’ll see that happen in this economy, but it’s the hard times that prove what we’re made of. Right?

This is coming as welcome news to many real estate investors out there who have been trying every thing they can think of to pull off a successful house flip. But now, mortgages on homes sold within 90 days will be eligible for insurance opening up FHA-insured financing for potentially millions of properties. Credit has of course been tight but this extension of the waiver will hopefully move enough money around to keep the market afloat.

The market for 90-day or less house flips is huge. Since the waiver went into effect, more than $3.6 billion worth of mortgages have been insured. This means that getting involved in foreclosure situations bears a lot less risk than it would otherwise. And as short sale investors everywhere know, there’s an army of movers and shakers out there ready to move massive amounts of property.

So it’s clear that the FHA and the market are for once in agreement. How long that will last is anyone’s guess. But at least through the end of this year we’ve got an opportunity to make major headway in battling the shadow inventory and the other looming housing issues that will arise.

So don’t wait! Move it now! There are homes you may have written off as not worth the risk. But that’s all changed now and it’s time you got on board. Your first step is to contact me and find out how real estate investing can make you the money you’ve been waiting for.

Basically the first step in understanding the blame game is to realize that while everyone is looking to make smart loans, not everyone knows how to go about approving or denying one. According to CoreLogic, “advanced risk mitigation processes are not squarely in place.” They estimate that fraud risk has gone up 30% since early 2009.

The numbers are a bit shocking when you really think about them. Reports indicate that one in every 24 REOs is associated with a fraudulent resale. Basically, investment companies are pushing through a high percentage of “suspicious” re-sales of REO and short sale homes. This means that the price is raised or lowered to make the deal more profitable.

I’m not here to give anyone ideas, but the main areas posing fraud risk are occupancy fraud, employment fraud, and undisclosed debt. But income fraud (borrowing a friend’s Benz to meetings?) is still the most common way to get around the system.

Several organizations are working to make rules stricter and more enforceable. But the main tool is for lenders exposed to fraud to communicate and share tools with other lenders. I don’t think the financial sector is known for cooperation, though, so we’ll see how the fraud reports play out in the next few months.