Is Real Estate Better Off without Government Intervention?

We know that loose lending standards creative financial bubble.

Now it looks like tight lending standards are preventing a housing recovery.

U.S. Housing Recovery Stymied by Government - Bloomberg

My opionion: Government should do less, not more. Set fewer rules and then police them better.

90 Days Waived- A Gift for a Year to Real Estate Investors

Did you read about the gift given to real estate investors by HUD & the FHA? Someone finally woke up and realized that artificially setting a 90-day waiting period to sell a house backed by government financing was slowing down the revitalization of inner-cities. I'm not sure why it took so long to figure this out, but I am glad they did. Funny thing, it is only slowing down rehabs for a year, then we'll be back to normal.

For one year we can buy and sell houses as quickly as we can and the buyers can receive FHA backed loans. If the house sells for up to 20% higher than it was purchased for, no special paperwork will be required. If it sells for more than 20% of the original purchase price, documentation showing improvements that justify the new selling price will be needed.

There aren't any details about the needed documentation, but keeping all receipts for goods and services that go into improving the property would be wise. Taking photographs and/or video wouldn't hurt for backup documentation.

Tell me what you think. Is this a good idea or a bad one? If it a good idea, why only for one year?

FHA & IRS Cooperate to Allow Tax Credit Bridge Loans

Up to now consumers have had to wait to receive their (up to) $8,000 tax credit.  They were not able to use it at closing to buy down the loan and lower monthly payments.  Up until last Friday, they were also not allowed to use a bridge loan to buy down the loan.  (They are not allowed to apply the tax credit to their 3.5% down payment.)

What happened Friday?  New guidelines from the FHA on how to Use First-Time Homebuyer Tax Cuts at closing.

Interested?  Go to http://tiny.cc/1NVoM  and read letter directly from the FHA website.

Bottom line:  First time home buyers who work with FHA approved lenders can get a bridge loan so they can apply their tax credit to reducing the loan. 

Expectation: First time home buyers will be able to pay more for properties.

Thanks to Shawn Watkins at Investors Workshops for the heads up.

http://investorsworkshops.blogspot.com/

http://www.investorsworkshops.com/

FHA Seasoning Rules- Another Option?

Most of Clear Day Capital's borrowers deal with the FHA's "90-day" rule.  A property needs to be titled for 90 days before it can qualify for FHA financing.  The challenge is a good rehab professional can fix the house in 2-4 weeks, have it under contract in another 2 weeks and then sit for 45-60 days with the property under contract while the clock ticks.

New York attorney Kathleen Scanlon has analyzed the FHA rules and indicates that if a property is transferred into a trust the property never sold, it simpley changes the identity of the owner.  To read the full article in her blog, go to  http://realestatelaw.typepad.com/where_is_blackacre_anyway/2009/04/seasoning-.html

Could a Real Estate Trust be used as a vehicle to control property and then sell it inside the 90 time limit?  I'll be working with Ronn Dunn (dunnron@aol.com) to confirm if this can be done, and if so, exactly how.