The New FHA House Flipping Laws

The number of house flipping shows we see on cable tv today really points to the popularity of real estate flipping. House flipping can be the perfect way to grow one's investment and even earn a living. However, there are some recent changes in FHA house flipping laws which can effect how you do business.

These new laws have been created because there are also a lot of scammers out there trying to con anyone investing in flips. There are an incredible number of people out there loosing their homes these days. So much so that there are now some FHA rules in effect to protect the market.

The new FHA House Flipping Laws are pretty involved reading but here's the basic points:

Property sold within 90 days purchase won't be able to get financing with FHA mortgages using HUD insurance.
Those selling a property within 91 and 180 days of purchase must record the resale value if it's selling for more than the last purchase price.
If the property is selling within 91 days and 12 months of purchase, HUD may require additional documentation of the home's market value.

With these new rules from the FHA you'll have some trouble getting buyers for your house flip. It basically means that you'll need to find buyers for your house flips that aren't using FHA backed loans. These rules are also commonly referred to as 'seasoning issues'. You'd have to hold the property for at least three months, or let it season before you could sell it to a buyer with financing of this type.

There are only three exceptions to these rules. They are:

1. Selling corporate housing purchased during the relocation of an employee
2. Selling HUD owned real estate property
3. Selling a newly build house

These exceptions don't typically apply to real estate house flipping, except maybe the HUD owned property. However, there are lots of other buyers using more conventional loans to purchase property.

Why Create these Rules?
In the past few years, The US Department of Housing and Urban Development (HUD) noticed that there were quite a few homes going into foreclosure. Most of these foreclosure homes were owned by first time low income homeowners who had government backed loans from the FHA, VA or Fannie Mae. These are all loans protected by Principal Mortgage Insurance (PMI) which is provided by HUD.

When homeowners lost their homes to foreclosure, HUD ended up covering the remainder of the mortgages through their government backed insurance programs. HUD has passed these FHA house flipping rules to protect these homeowners and themselves from losing money. You can see the rule in a document called, 'Prohibition of Property Flipping in HUD's Single Family Mortgage Insurance Programs; Final Rule; 24 CFR Part 203, Doc. No. FR-4615-F-02.' You can usually get them from the government's Federal Register Site.

Advice for dealing with Seasoning:

Sell to Buyers Non-Conforming Loans. There are still a lot of other mortgages out there that don't require or use PMI. These are conventional loans made to buyers who can make large down payments and are more likely to purchase a very nice remodeled house anyway.
Document all costs and profits. Keep all of your receipts and creating a personal record of whom you paid for what and the improvements made to each property.
Lease-to-own your house flips. The FHA house flipping rules only apply to recently purchased homes. Let the buyer lease-to-own the property and you'll avoid seasoning issues entirely. Since, the homeowner won't be applying for a mortgage to pay off the property; you don't have to worry about them being denied because the property was recently purchased.

There are still plenty of ways to flip a house even with these new house flipping rules. These rules help wholesaling investors and HUD by helping buyers keep their homes when they get mortgages.

Colin Egbert is an experienced Real Estate Investor with plenty of short sale techniques to aid fellow investors in their quest to succeed and make huge profits. He's the author of the ebook "Getting Started with Short Sales" providing the tools needed to start your own real estate investing business. Colin is also the CEO of Realestateinvestor.com a website dedicated to helping investors make the most of their business.

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Student Loans - Lose Social Security Benefits If You Don't Pay

A vast majority of people take out student loans to pay for higher education. The Supreme Court has decided to make social security benefits a means of repaying them.

No Benefits For You!

While millions borrow money to attend college and graduate school, not everyone pays this money back. The failure to pay can result from circumstances such as a slow job market, failure to finish school and health problems. Of course, there are the select few who simply welch on the repayments. The U.S. Supreme Court rendered a decision on December 7, 2005, impacting people who are behind in paying their loans.

In Lockhart v. United States, the Supreme Court was asked to rule on whether the federal government could seize social security benefits to cover outstanding student loans. The case involved James Lockhart, a disable man, who sued to stop the government from cutting his monthly $874 check. Lockhart suffers from heart disease, diabetes and other health problems and lives in public housing in Seattle. He argued the forfeiture of part of his check made it impossible for him to continue to buy his medication and food. The Justices disagreed with Lockhart.

Under federal law, efforts to collect defaulted student loans had a 10 year limit. Put another way, the federal government was barred from hunting down delinquent payers after ten years. In the past few years, however, Congress did away with this limitation, which brought forth a conflict of law. The Social Security Act contains language protecting benefits from being seized as part of debt actions. In this case, the Supreme Court ruled that such protections only apply to private individuals, not the federal government. In short, social security benefits are no longer safe.

Currently, the total balance on outstanding student loans is roughly $30 billion. Of this amount, roughly seven billion are delinquent or defaulted loans. With 25 percent of loans in the red, one can see why the government has an interest in collecting the debt.

Personally, I don't have any problem with this ruling. If you borrow money to go to school, you should pay it back. Failing to do so could deprive others of the same opportunity.

Richard A. Chapo is a San Diego business lawyer with http://www.sandiegobusinesslawfirm.com - a San Diego business law firm in San Diego, California.

refinance mortgage

Loan Modification - How to Get It?

People who have defaulted in paying their mortgage can breathe a sigh of relief if their loan gets modified as it allows them to pay mortgage at a lower interest rate or even choose another type of loan as per requirement. Getting a loan modification is not an easy process. You need to talk to the bank and convince them as to why you want it to be done.

Here are some tips that can help you in getting a loan modification:

1. 
   Always make it a point to keep track of your transactions with your bank. Make a note of the all the payments you have done till date and also make keep track of the dates. If you do so, you can always show it to the bank as proof that you always do your monthly payments on time. This can be done easily by asking the bank or the money lender to provide you with the statements of the payments that you have done.
   
   
   
   



2. 
   Before you go for a loan modification, double check that you have all the proofs to not only show the bank that you have always made attempts to do the monthly payments but also to make them understand that you are going through a financial crisis. For e.g. you are paying your mortgage on time until your salary was reduced due to some reason. This will surely convince the bank to provide you with a modified loan that will help you do regular payments.
   
   
   
   



3. 
   Apart from keeping track of the payments you have done to the bank, you should also make a record of your salary, bills and expenses. Do not throw away your bills as you will be required to produce them to the bank so that the banks come to know how terrible your financial situation is. What happens is after the bank goes through your loan payment details they will also look into your salary and expenses.
   
   
   
   



4. 
   The most important thing you need to do to get a loan modification is to provide a proof to the bank as to show how much you are struggling financially to make your payments. If you do not provide sufficient proofs to show your financial difficulty, it will be very difficult to get your loan modified. You should also let the bank know that modification of the loan will surely be the best way to improve your circumstances.
   
   
   
   

Always keep in mind that no banks will like to go for foreclosure as this will incur more cost in maintaining the property and selling the property. All they want is to make sure the borrower is able to repay the loan in the long term if they are not able to pay mortgage regularly. Therefore, loan modification can turn out to be the best way for the borrower to pay the loan in a time duration that is not only suitable for him but also helps in pay loans at a reduced rate.

If your circumstance has changed or the terms of your financing have, a loan modification may be right for you. An essential question addressed in all loan modification submissions is the existence of a documented hardship. A short sale is an excellent way to stop foreclosure in tampa and can offer time and protection, as long as it is done properly by a qualified attorney. If you want to learn about short sale tampa, call 727.388.8332 now for a complimentary strategy consultation.

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Typical Rates & Fees Associated with Business Loans

When acquiring a business loan, one can expect to pay different rates and fees based upon the years the business has been in operation, the owner's personal credit history, the business's credit history, and whether or not the loan is secured or unsecured. If the loans are guaranteed, whether or not they are by the government or some other agency can affect the rates as well.

Interest Rates are controlled by usury laws. A lender can safely charge a business up to 10% interest per year and not violate any usury laws. Depending on the type of lender you seek, personal or commercial, this may not always hold true. There are different usury laws governing personal lenders and those that are protected by the Federal Government (commercial banks, credit unions, savings and loans). Typical lenders charge between 6-7%, however, as stated earlier; financial security in the business and the owner play an important role in establishing interest rates. Often times commercial banks offer fixed interest rates, but more often than not, the rates are flexible after a given number of years. Government loans are offered to small businesses that meet certain criteria. These loans are offered at the approximate US Treasury note rate of + 1.7% (fixed rate). Other agencies and specially funded business loans offer rates that are decided by special committees. Usually they are lower because these loans are only available to certain business owners.

Fees come in different increments based upon the institution you choose to borrow money from. Typical fees include application fees that can run up to $500, although, some institutions and loan companies do not charge any application fee. Closing Costs which usually run within 1-2% of the original amount borrowed. Common commercial loans that are under $500,000 are usually at least 2%. Loans above $500,000 usually have fees ranging from 1.5-1.75%. Other fees that one might encounter when borrowing money for his or her business are: appraisal fees, attorney fees, and environmental assessments. These fees may or may not be included in the closing costs. If not included, these fees may mount up to several thousand dollars. It's important to ask your financial institution which fees are included in the final closing costs. Government loans and loans that are offered through agencies that cater to certain small business owners offer fees that are based upon the project size. Most are usually at least 3%, some agencies charge the exact amount of all filing fees and an additional 1-2% of the original loan amount.

Many individuals choose to refinance their residence as means for a business loan. Often times these loans can be acquired much easier than a business only loan. Interest rates are often lower and fixed for longer amounts of time, as well. Fees usually range below 2% and can be included in the loan. Having equity in your home may enable business owners to borrow money with lesser interest rates and fees. However, it is a risky plan. If your payments are not made on-time and in full each month, your home may be sold to cover the loan.

John Williams is the business loans blogger at http://businessloans.blogspot.com He reviews business loans and interprets complicated financial data into simple to understand language.

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