Larry’s Financial Tip June 09

In February, the U.S. Government signed into law an economic stimulus act that pours $787 billion into the U.S. economy.  But instead of issuing stimulus checks like President George W. Bush did, the current administration opted to pour money into government programs and public works.  Does that mean that as real estate investors you won’t get to see any of the action?

Not at all!  I’ve been studying and researching the stimulus plan and I’ve actually just finished writing a course on over 300 ways that investors just like you and I can benefit from the government’s money.  I’m going to share with you today exactly how you can target your real estate investing to get a piece of the American pie colored green!

The Federal government is doling out plenty of money for projects.  Some of that money is going to Federal projects and some of it is going to state projects or local projects.  The states then hand out their share to various state and local projects.  One of the biggest projects right now is road and highway repairs and construction.  You don’t, however, have to be in the road construction business to cash in on this money.

Check out the Federal recovery web site at http://www.recovery.gov or your state or local recovery website to see what projects are currently underway or about to be funded.  Each project will require tons of employees.  The government estimates the road projects alone this year will replace as many jobs as have been lost in the auto industry.  That’s a lot of people excavating, laying concrete, driving steam rollers, and holding traffic warning signs.  To profit, you just need to track where those projects are being funded.

All those people have to live somewhere.  Just like the Industrial Revolution caused people by the millions to migrate to the cities, the road construction projects will cause people to migrate where the work is.  And the work isn’t just in cities.  State and National parks are funded for road work as are cities and suburbs and even rural areas.  What you have to do is research where the work will be done and look for investment properties to flip to the home improvement buyer or to lease-to-own or to rent.  The next American land rush may very well be exactly where the stimulus money is going.  And now you know how to get there first and have real estate to sell or rent to new residents.

To track road construction projects funded by the recovery act, go to http://www.dot.gov/recovery/.

For more really cool ways that the American Recovery and Reinvestment Act can actually help your real estate investing business or any small business, check out my new course coming soon at http://www.StimulusOpportunitySecrets.com.

HUD Properties, FHA & Title Seasoning

by William Bronchick

With HUD properties, title seasoning, FHA loans, and short sales, investors have had some confusion regarding the rules.  This article will clarify all of these issues for you.

HUD is the United States Department of Housing and Urban Development, a government agency whose goal is to increase homeownership, support community development .  The Federal Housing Administration (FHA), which is part of HUD, provides mortgage insurance on loans made by FHA-approved lenders throughout the United States. 

HUD and FHA come into play in three different scenarios in the investor/foreclosure arena.

HUD Foreclosed Properties

When a person gets an FHA loan, it is funded through a private lender and the loan is insured or backed by the Federal Housing Administration.  When the loan is in default, FHA pays out the lender and take an assignment of the loan.  When the property is foreclosed, it is owned by HUD.  HUD then offers these properties for sale to both owner-occupants and investors.  The properties are offered on the local MLS computer database, but you have to submit an offer through a HUD-approved real estate broker.  The offer is made under a bid process, under which the HUD will either accept or reject your offer depending on what other offers are submitted.  An investor can buy, hold, or flip these properties if their offer is accepted.

FHA Loans and Title Seasoning

Then second place HUD comes into play is the FHA loan.  If a buyer of your property gets an FHA loan, there is a title seasoning requirement of 90 days.  In other words, if you are selling the property to an FHA buyer, you must have title recorded in your name for 90 days before the closing and funding of the FHA loan.  This precludes you from doing a double-closing or a short term (less then 90 days) flip. 

Keep in mind that the 90 day seasoning rule has nothing to do with HUD-owned properties as described above. In other words, you can buy a HUD property and flip it 3 minutes later so long as your end-buyer is not using FHA financing.

FHA Loans in Short Sale

The third place HUD comes into play is if you are working on a foreclosure short sale on a property that has an FHA loan.  In this case the Federal Housing Administration is insuring the loan and must approve the short sale.  You can buy a property with an FHA loan on it, then flip it without a title seasoning issue, unless your end-buyer is getting an new FHA loan.

In summary, don’t confuse the FHA new loan 90-day title seasoning requirement with the two other scenarios, HUD-owned properties and and existing FHA-insured properties.  For more information on HUD properties and FHA loans, visit www.hud.gov.

LEARN MORE ABOUT FORECLOSURE INVESTING AT THE
FORECLOSURE INVESTING BOOT CAMP

Homeowners who have missed a payment or two and feel that there is a great possibility that their homes will turn into REO properties should contact any agency certified by the U.S. Department of Housing and Urban Development (HUD), according to Consumer Credit Counseling Services of the Delaware Valley in Philadelphia, Pennsylvania President Patricia Hasson.

Hasson recommended that distressed homeowners should not dilly-dally and contact any HUD-certified agency to ask for assistance and determine if there are some ways for them to save their properties from foreclosure.

As the number of foreclosed properties continues to grow, so are unscrupulous people who take advantage of the desperation of many homeowners. They would offer their foreclosure prevention services to distressed homeowners, but all they really wanted is to take their properties or money.

HUD-certified agencies know what are the legitimate programs that could help troubled homeowners avoid foreclosures.

One federal program that could be of help to a distressed homeowner is Making Home Affordable. This program is designed to help over 9 million troubled borrowers save their properties from foreclosure through loan modification or refinancing.

However, only loans that are owned or guaranteed by government-controlled enterprises, Federal Home Loan Mortgage Corp. and Federal National Mortgage Association are qualified for the refinancing or modification program.

The Hope for Homeowners is a program created to help homeowners who are at default and at risk of foreclosure refinance their mortgages into affordable, sustainable loans. Homeowners who are in danger of repossession have until September 30, 2011 to avail of this program.

For older homeowners, 62 years old and above, who are in financial distress and are at risk of defaulting and going into foreclosure, a program is also designed for them to help them pull themselves out of the financial quagmire they are in.

This so-called reverse mortgage is insured by the Federal Housing Administration (FHA) thus, it should be given only by lenders approved by the FHA. Homeowners should be aware that, depending on their income, a counseling fee of up to $125 is required, based on guidelines by the HUD.

Meanwhile, Hasson believed that the main reason for the mortgage delinquency is decreased income. Since early 2006, there have been nearly 2.1 million filings of foreclosure in the country.

To help those who were affected by foreclosures, the REO Rental Initiatives is designed for them. Created for qualified former tenants of REO properties, this program allows them to lease the properties where they are living that have been purchased by the Federal Home Loan Mortgage because of foreclosure.

About the Author:
Joseph Smith has been educating buyers on the finer points of REO Properties purchase at ForeclosedPropertiesData.com for over five years. Click here to visit and read more advice on finding foreclosed homes.