Big government regulation will step out of the way for another year. Woo Hoo!
For years, FHA would not let buyers borrow FHA money to buy a house that had been purchased, rehabilitated, and then put on the market for resale, unless the previous owner held the property for more than 13 weeks. Another case where a minuscule amount of fraud cases leads to a total ban on free market activity. Magically, all fraud disappears between the 12th and the 13th week, according to government studies I am sure.
Such a change should just be made permanent. Many neighborhoods, right here in Volusia County, are scarred with junker after junker. Instead of assuming only crooks buy, rehab, and resell homes - FHA should just get out of the way. If you see fraud - report it.
The recent rules regarding appraisals has prevented sales due to inflated opinions, or decimated values in entire subdivisions through deflated values. Once again, the free market is the enemy and only a government takeover of the appraisal industry would make the bureaucrats happy all in the name of fraud prevention.
Remember a few years ago when short sales were being called a scam? Legislators were about to regulate short sales out of existence. The FBI came up with all kinds of anti-short sale scam scenarios including the following - anybody who can get this to work deserves to make a profit -
"Short-sale schemes are desirable to mortgage fraud perpetrators because they do not have to competitively bid on the properties they purchase, as they do for foreclosure sales. Perpetrators also use short sales to recycle properties for future mortgage fraud schemes. Short-sale fraud schemes are difficult to detect since the lender agrees to the transaction, and the incident is not reported to internal bank investigators or the authorities. As such, the extent of short sale fraud nationwide is unknown. A real estate short sale is a type of pre-foreclosure sale in which the lender agrees to sell a property for less than the mortgage owed. In a typical short sale scheme, the perpetrator uses a straw buyer to purchase a home for the purpose of defaulting on the mortgage. The mortgage is secured with fraudulent documentation and information regarding the straw buyer. Payments are not made on the property loan so that the mortgage defaults. Prior to the foreclosure sale, the perpetrator offers to purchase the property from the lender in a short-sale agreement. The lender agrees without knowing that the short sale was premeditated. The mortgage owed on the property often equals or exceeds 100 percent of the property's equity (see figure17)."
It is clear regulation and forcing lenders to make high risk loans started the bubble, now ridiculous rules regarding taxation, appraisals, and an anti-investor/anti-profit mentality is pervasive in our current government.
FHA is calling off the dogs temporarily. Let's hope they retire them.
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