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The Great Real Estate Swindle All things related to the housing debacle including sub-prime lending practices, foreclosure fraud, MERS, REMICS and banking and political malfeasance.

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Old 10-24-2011, 11:06 PM   #1
Ought Six
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Arrow Got A Hundred Bucks? Buy A Home (Or Virtually Anything Else) Using 2,000x Non Recourse Leverage

http://www.zerohedge.com/news/got-hu...ourse-leverage
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Old 10-25-2011, 12:48 AM   #2
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What is a HUD REO home?
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Old 10-25-2011, 06:16 AM   #3
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HUD = Department of Housing and Urban Development
REO = Real Estate Owned

So, a house that has been financed through HUD, that has been foreclosed. I was surprised to learn HUD housing is not always distressed urban homes but also covers very nice homes in good areas. The problem with these properties may be the price. People walk away from a low interest mortgage for a reason - since purchase the interest is no longer low and the value of the home is far less than the amount owed.

If the gov is trying to encourage people who cannot come up with a down payment to take over the original mortgage in an area that has seen a 60% drop - this is a taxpayer's disaster in the making. You know who will jump at the opportunity - people who have nothing to lose. They'll take that house and live in it, and fail to pay the bills or keep up the property, and it will end up sitting empty again.
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Old 10-25-2011, 08:49 AM   #4
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Default So is it a FHA 203K, but with a $100 down payment rather than a 3.5 downpayment?

Funds for Handyman-Specials and Fixer-Uppers

The purchase of a house that needs repair is often a catch-22 situation, because the bank won't lend the money to buy the house until the repairs are complete, and the repairs can't be done until the house has been purchased.

HUD's 203(k) program can help you with this quagmire and allow you to purchase or refinance a property plus include in the loan the cost of making the repairs and improvements. The FHA insured 203(k) loan is provided through approved mortgage lenders nationwide. It is available to persons wanting to occupy the home.

The downpayment requirement for an owner-occupant (or a nonprofit organization or government agency) is approximately 3.5% of the acquisition and repair costs of the property.

The 203(k) loan includes the following steps:

A potential homebuyer locates a fixer-upper
and executes a sales contract after doing
a feasibility analysis of the property with their
real estate professional. The contract should
state that the buyer is seeking a 203(k) loan
and that the contract is contingent on loan
approval based on additional required repairs by the FHA or the lender.

The homebuyer then selects an FHA-approved 203(k) lender and arranges for a detailed proposal showing the scope of work to be done, including a detailed cost estimate on each repair or improvement of the project.

The appraisal is performed to determine the value of the property after renovation.

If the borrower passes the lender's credit-worthiness test, the loan closes for an amount that will cover the purchase or refinance cost of the property, the remodeling costs and the allowable closing costs. The amount of the loan will also include a contingency reserve of 10% to 20% of the total remodeling costs and is used to cover any extra work not included in the original proposal.

At closing, the seller of the property is paid off and the remaining funds are put in an escrow account to pay for the repairs and improvements during the rehabilitation period.

The mortgage payments and remodeling begin after the loan closes. The borrower can decide to have up to six mortgage payments (PITI) put into the cost of rehabilitation if the property is not going to be occupied during construction, but it cannot exceed the length of time it is estimated to complete the rehab.

Escrowed funds are released to the homeowner during construction through a series of draw requests for work that is completed. To ensure completion of the job, 10% of each draw is held back; this money is paid after the homeowner informs the lender that the work has been completed and after the lender determines there are no additional liens on the property.

For a list of lenders who are offering the 203(k) Rehabilitation Program, please see the 203(k) Lenders List. The interest rate and discount points on the loan are negotiable between the borrower and the lender.

http://portal.hud.gov/hudportal/HUD?.../203k/sfh203kc

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