HOUSING: Feds suspend anti-flipping rule

[garysears]

I agree patientrenter. FHA standards are too loose with regard to down payment. In the recent shadow inventory article I commented that the flipping market wouldn’t exist without the FHA. FHA buyers ARE the market at the low end. FHA standards are why low end prices have exploded this past year. I think many of the houses bought last year with FHA backing will be foreclosed, as I am expecting low end prices to trend downward again.

I’ve been wrong before. The key for prices is in how the delinquent loans are handled. Either money is handed out to big money vultures under the table via discounted off market bulk sales, or prices are allowed to come down for normal buyers by putting the inventory on the open market.

I just can’t reconcile price strength with loan distress. It seems like nothing is better than 2 years ago, and maybe things are worse. Getting tired of waiting for it to play out though…

[an]

[quote=patientrenter][quote=garysears]…
I want to pay the prices the flippers are paying but I can’t due to unlevel playing field and preference for cash deals over financed deals.[/quote]

Garysears, I agree with everything you said. You made another excellent post. I would only move the emphasis a little bit to say that the FHA standards are ridiculously loose, and the resulting excess money being paid under FHA loans is a big part of the problem, and one that should be fixed by implementing a minimum 20% downpayment for FHA loans.[/quote]
So you’re basically saying we shouldn’t have FHA at all. If you have 20% down, why would you consider FHA when you can go conventional for much cheaper?

[an]

[quote=patientrenter][quote=garysears]…
I want to pay the prices the flippers are paying but I can’t due to unlevel playing field and preference for cash deals over financed deals.[/quote]

Garysears, I agree with everything you said. You made another excellent post. I would only move the emphasis a little bit to say that the FHA standards are ridiculously loose, and the resulting excess money being paid under FHA loans is a big part of the problem, and one that should be fixed by implementing a minimum 20% downpayment for FHA loans.[/quote]
So you’re basically saying we shouldn’t have FHA at all. If you have 20% down, why would you consider FHA when you can go conventional for much cheaper?

[an]

[quote=patientrenter][quote=garysears]…
I want to pay the prices the flippers are paying but I can’t due to unlevel playing field and preference for cash deals over financed deals.[/quote]

Garysears, I agree with everything you said. You made another excellent post. I would only move the emphasis a little bit to say that the FHA standards are ridiculously loose, and the resulting excess money being paid under FHA loans is a big part of the problem, and one that should be fixed by implementing a minimum 20% downpayment for FHA loans.[/quote]
So you’re basically saying we shouldn’t have FHA at all. If you have 20% down, why would you consider FHA when you can go conventional for much cheaper?

[an]

[quote=patientrenter][quote=garysears]…
I want to pay the prices the flippers are paying but I can’t due to unlevel playing field and preference for cash deals over financed deals.[/quote]

Garysears, I agree with everything you said. You made another excellent post. I would only move the emphasis a little bit to say that the FHA standards are ridiculously loose, and the resulting excess money being paid under FHA loans is a big part of the problem, and one that should be fixed by implementing a minimum 20% downpayment for FHA loans.[/quote]
So you’re basically saying we shouldn’t have FHA at all. If you have 20% down, why would you consider FHA when you can go conventional for much cheaper?

[an]

[quote=patientrenter][quote=garysears]…
I want to pay the prices the flippers are paying but I can’t due to unlevel playing field and preference for cash deals over financed deals.[/quote]

Garysears, I agree with everything you said. You made another excellent post. I would only move the emphasis a little bit to say that the FHA standards are ridiculously loose, and the resulting excess money being paid under FHA loans is a big part of the problem, and one that should be fixed by implementing a minimum 20% downpayment for FHA loans.[/quote]
So you’re basically saying we shouldn’t have FHA at all. If you have 20% down, why would you consider FHA when you can go conventional for much cheaper?

[garysears]

It does seem as though the government is backing loans that won’t be repaid through the FHA. I’ve already seen some 2007/2008 FHA financed properties foreclosed. The government is encouraging speculation at this point. The tax credit combined with 3.5% down payment means effective zero down financing is being offered with tax payer backing.

I’m not sure what benefit the FHA really provides and understand it has been expanded greatly from its beginnings. I’m not a finance guy but I expect the added cost of FHA loans is not enough to cover eventual losses.

I guess if loan costs and losses would actually net out then criticism would be muted, provided the tax credit goes away and doesn’t come back. But the purpose of any government program of course is to reward one group of people at the expense of another. If covering losses with loan costs and fees was part of the calculation the government wouldn’t be involved.

I’m going conventional because I am trying to be conservative with how much I borrow and how much it will cost long term. But I am competing with the FHA crowd that doesn’t seem to comprehend that they are drastically overpaying BECAUSE of the tax credit and FHA financing terms. The zero to limited money down crowd is bidding up all available inventory for now.

I’m will be a first time homebuyer and I eagerly await the expiration of the tax credit so prices will go back down. Prices will go down more than 8k since that 8k has is leveraged at a 28:1 ratio with 3.5% down FHA loans.

It is no coincidence that the “sweet spot” for flipper pricing at the low end is $225k to $250k.

[garysears]

It does seem as though the government is backing loans that won’t be repaid through the FHA. I’ve already seen some 2007/2008 FHA financed properties foreclosed. The government is encouraging speculation at this point. The tax credit combined with 3.5% down payment means effective zero down financing is being offered with tax payer backing.

I’m not sure what benefit the FHA really provides and understand it has been expanded greatly from its beginnings. I’m not a finance guy but I expect the added cost of FHA loans is not enough to cover eventual losses.

I guess if loan costs and losses would actually net out then criticism would be muted, provided the tax credit goes away and doesn’t come back. But the purpose of any government program of course is to reward one group of people at the expense of another. If covering losses with loan costs and fees was part of the calculation the government wouldn’t be involved.

I’m going conventional because I am trying to be conservative with how much I borrow and how much it will cost long term. But I am competing with the FHA crowd that doesn’t seem to comprehend that they are drastically overpaying BECAUSE of the tax credit and FHA financing terms. The zero to limited money down crowd is bidding up all available inventory for now.

I’m will be a first time homebuyer and I eagerly await the expiration of the tax credit so prices will go back down. Prices will go down more than 8k since that 8k has is leveraged at a 28:1 ratio with 3.5% down FHA loans.

It is no coincidence that the “sweet spot” for flipper pricing at the low end is $225k to $250k.

[garysears]

It does seem as though the government is backing loans that won’t be repaid through the FHA. I’ve already seen some 2007/2008 FHA financed properties foreclosed. The government is encouraging speculation at this point. The tax credit combined with 3.5% down payment means effective zero down financing is being offered with tax payer backing.

I’m not sure what benefit the FHA really provides and understand it has been expanded greatly from its beginnings. I’m not a finance guy but I expect the added cost of FHA loans is not enough to cover eventual losses.

I guess if loan costs and losses would actually net out then criticism would be muted, provided the tax credit goes away and doesn’t come back. But the purpose of any government program of course is to reward one group of people at the expense of another. If covering losses with loan costs and fees was part of the calculation the government wouldn’t be involved.

I’m going conventional because I am trying to be conservative with how much I borrow and how much it will cost long term. But I am competing with the FHA crowd that doesn’t seem to comprehend that they are drastically overpaying BECAUSE of the tax credit and FHA financing terms. The zero to limited money down crowd is bidding up all available inventory for now.

I’m will be a first time homebuyer and I eagerly await the expiration of the tax credit so prices will go back down. Prices will go down more than 8k since that 8k has is leveraged at a 28:1 ratio with 3.5% down FHA loans.

It is no coincidence that the “sweet spot” for flipper pricing at the low end is $225k to $250k.

[garysears]

It does seem as though the government is backing loans that won’t be repaid through the FHA. I’ve already seen some 2007/2008 FHA financed properties foreclosed. The government is encouraging speculation at this point. The tax credit combined with 3.5% down payment means effective zero down financing is being offered with tax payer backing.

I’m not sure what benefit the FHA really provides and understand it has been expanded greatly from its beginnings. I’m not a finance guy but I expect the added cost of FHA loans is not enough to cover eventual losses.

I guess if loan costs and losses would actually net out then criticism would be muted, provided the tax credit goes away and doesn’t come back. But the purpose of any government program of course is to reward one group of people at the expense of another. If covering losses with loan costs and fees was part of the calculation the government wouldn’t be involved.

I’m going conventional because I am trying to be conservative with how much I borrow and how much it will cost long term. But I am competing with the FHA crowd that doesn’t seem to comprehend that they are drastically overpaying BECAUSE of the tax credit and FHA financing terms. The zero to limited money down crowd is bidding up all available inventory for now.

I’m will be a first time homebuyer and I eagerly await the expiration of the tax credit so prices will go back down. Prices will go down more than 8k since that 8k has is leveraged at a 28:1 ratio with 3.5% down FHA loans.

It is no coincidence that the “sweet spot” for flipper pricing at the low end is $225k to $250k.

[garysears]

It does seem as though the government is backing loans that won’t be repaid through the FHA. I’ve already seen some 2007/2008 FHA financed properties foreclosed. The government is encouraging speculation at this point. The tax credit combined with 3.5% down payment means effective zero down financing is being offered with tax payer backing.

I’m not sure what benefit the FHA really provides and understand it has been expanded greatly from its beginnings. I’m not a finance guy but I expect the added cost of FHA loans is not enough to cover eventual losses.

I guess if loan costs and losses would actually net out then criticism would be muted, provided the tax credit goes away and doesn’t come back. But the purpose of any government program of course is to reward one group of people at the expense of another. If covering losses with loan costs and fees was part of the calculation the government wouldn’t be involved.

I’m going conventional because I am trying to be conservative with how much I borrow and how much it will cost long term. But I am competing with the FHA crowd that doesn’t seem to comprehend that they are drastically overpaying BECAUSE of the tax credit and FHA financing terms. The zero to limited money down crowd is bidding up all available inventory for now.

I’m will be a first time homebuyer and I eagerly await the expiration of the tax credit so prices will go back down. Prices will go down more than 8k since that 8k has is leveraged at a 28:1 ratio with 3.5% down FHA loans.

It is no coincidence that the “sweet spot” for flipper pricing at the low end is $225k to $250k.

[an]

garysears, you won’t get an argument out of me in favor of FHA. But it is what it is. The government blew up this last bubble and they’re trying to blow it up again, albeit with less ferocity. Greenspan himself was encouraging people to get ARM loans 6-7 years ago.

FHA was supposed to “help” people buy housing. I.E. allow people to buy houses earlier than they should or more than they should. W/out FHA, poor people would cry foul, saying the rich keeps on getting richer while the poor get no help buying a home.

[an]

garysears, you won’t get an argument out of me in favor of FHA. But it is what it is. The government blew up this last bubble and they’re trying to blow it up again, albeit with less ferocity. Greenspan himself was encouraging people to get ARM loans 6-7 years ago.

FHA was supposed to “help” people buy housing. I.E. allow people to buy houses earlier than they should or more than they should. W/out FHA, poor people would cry foul, saying the rich keeps on getting richer while the poor get no help buying a home.

[an]

garysears, you won’t get an argument out of me in favor of FHA. But it is what it is. The government blew up this last bubble and they’re trying to blow it up again, albeit with less ferocity. Greenspan himself was encouraging people to get ARM loans 6-7 years ago.

FHA was supposed to “help” people buy housing. I.E. allow people to buy houses earlier than they should or more than they should. W/out FHA, poor people would cry foul, saying the rich keeps on getting richer while the poor get no help buying a home.

[an]

garysears, you won’t get an argument out of me in favor of FHA. But it is what it is. The government blew up this last bubble and they’re trying to blow it up again, albeit with less ferocity. Greenspan himself was encouraging people to get ARM loans 6-7 years ago.

FHA was supposed to “help” people buy housing. I.E. allow people to buy houses earlier than they should or more than they should. W/out FHA, poor people would cry foul, saying the rich keeps on getting richer while the poor get no help buying a home.

[Author]

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