House Flipping Laws: Real Estate Guilty? Property Prices Falling Discover How Protect Yourself Now

Sep 10

House Flipping Laws: Real Estate Guilty? Property Prices Falling Discover How Protect Yourself Now

House Prices Sold. HUD believes that house flippers inflated prices and added laws to protect consumers.

Flipping a house, or reselling a property quickly after purchasing, isn’t illegal. Because so many house flippers committed mortgage fraud or used predatory lending practices, HUD, the U.S. Department of Housing and Urban Development, is trying to protect home buyers. HUD also seeks to halt appraisals at inflated prices. The agency believes that house flippers artificially inflated prices.

Effective July 9, 2006, HUD changed their lending regulations for new FHA financing. To keep wholesalers from making a quick profit, only the actual owner of a home can sell a home with FHA, Federal Housing Administration, financing. To discourage house flipping, homes sold within 90 days of purchase won’t be eligible for FHA financing, either. Additionally, houses selling for twice as much as the purchase price in the time period between 91 and 180 days after the last sale require additional valuation data in order to qualify for FHA financing.

The exemptions to this policy include HUD, Fannie Mae, Freddie Mac, lenders selling real estate owned (foreclosures), local or state housing agencies, nonprofits with HUD permission to purchase discounted real estate owned properties, inherited properties, and dwellings located in presidentially declared disaster areas.

What does this mean for real estate investors who flip houses?

* You either keep the house for 90 days or sell to a buyer who uses conventional financing.
* You spend a few weeks fixing the house and sell so it closes after the 90 day period.
* You keep records of your improvements and prove that the new price reflects your work.
* You keep your mortgage lender honest.
* You keep your appraiser honest.
* You make a fair profit for helping a desperate seller move on, fixing a distressed house, and creating a new buyer’s “dream home.”

Perhaps house flippers did inflate house prices over the past few years. However, the housing shortage, favorable interest rates, easy lending practices, and rising prices fueled the economy.

The property market after many years of good growth is starting to slow and with the stock market falling home owners are starting to worry that house prices could nose dive to.

However there is a simple way to protect yourself from these falls and its becoming more popular than ever.

The Outlook

The property boom is over for the time being for the following simple reasons:

Liquidity in the economy is being curtailed by higher interest rates.

This makes both exiting and new mortgages cost more and less people can afford new housing or to move.

Even if rates were not to rise any further the above still applies to a lot of homeowners:

There are a huge percentage of mortgages that were sold with low starter rates which have now increased and this is equivalent to a rate rise to these people.

After a boom a best normally follows and that is what we are likely to see.

If the stock market continues to fall then liquidity will be squeezed even further and less money means less wealth and housing prices will suffer even more.

A simple solution

There are schemes that will allow you to lock in the value of your house at current rates for a small premium.

If house prices fall then you can get the value you locked in your property at and you are protected against a plunging property market.

If house prices rise, you are unaffected and can take advantage of the full gain in prices.

So you protect yourself from falls and can take advantage of any rises which gives peace of mind.

In a raging bull market these companies don?t do much business, but in a falling market business is booming and it is perhaps something that any homeowner should consider.

The amount paid for the protection offered is affordable and gives peace of mind and is applicable to the majority of home owners.

Not only is this significant for home owners it also cuts the risk of people investing in property and can be used on commercial property as well. Find more information about House Sale Prices here.

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