sdr, what do you think of FHA loans in general? I know in the Inland Empire often the seller gives the 3% to buyers as a gift. This down payment, all closing costs, etc., are paid by the seller but added to the purchase price. The result is: the buyers have negative equity from day one.
These FHA-guaranteed loans are a huge risk for the taxpayer, who ultimately pays the bills. And these underwater FBs are very likely to default, so these properties will be back as REOs or short sales, further reducing prices. A vicious circle, encouraged and paid for by Uncle Sam. With my tax dollars!
