FHA extends suspension of ‘anti-flipping’ rule for another year

The rule was intended to prevent speculators from defrauding the government, but it also stifled the purchase and renovation of foreclosed homes by legitimate investors

For years the federal government prohibited the use of Federal Housing Administration mortgage financing by buyers purchasing homes from sellers who had owned the property for less than 90 days. The idea was to prevent speculators from defrauding the government through quick flips of houses – often involving straw buyers and corrupt appraisers – at wildly inflated prices.

One side effect of that policy had been to stifle purchase-and-renovate projects by legitimate, small-scale investors who buy houses after foreclosure or loan defaults and then resell them in substantially improved condition. In many parts of the country, first-time and moderate-income buyers often sought to buy these fixed-up houses using FHA-insured mortgages with 3.5% down payments, but were prevented from doing so by the “anti-flipping” rule.

Now you can continue to sell to FHA buyers which is huge in today’s lending environment. These are great loans to use for wholesale homes to first time home buyers and for wholesaling pretty houses.

If you’d like to capitalize on one of the easiest ways to make great cash flow with the current foreclosure epidemic, read this article closely. You don’t need any experience in real estate to start making a great part time income working only a few hours a week.

Here are the facts:

Lenders repossessed 1,050,500 homes last year, according to the 2010 end-of-year foreclosure report from RealtyTrac.

The annual figure marks a record-high number of new bank-owned properties tracked by the company. The 2010 tally is up 14 percent from the previous year, when banks seized 918,376 homes, according to RealtyTrac’s historical data.

Just to put things into perspective, in 2008 RealtyTrac reports there were 861,664 new REOs. That year the figure more than doubled from 2007, when there were 404,849 newly repossessed homes. In 2006, RealtyTrac tracked 268,532 new REOs.

While the number of homes taken back by lenders jumped by more than 130,000 from 2009 to 2010, RealtyTrac’s data shows the number of default filings declined by 20 percent over the same period. The industry is still wading through a severe backlog of unpaid mortgages, but with new defaults apparently tapering off, it’s plausible that the size of that backlog may begin contracting.

According to RealtyTrac’s 2010 report, a total of 3,825,637 foreclosure filings – including default notices, scheduled auctions and bank repossessions – were reported on a record 2,871,891 U.S. properties during the year. The company says 2.23 percent of all U.S. housing units, or one in 45, received at least one foreclosure filing last year.

Total filings are up nearly 2 percent from 2009 and 23 percent from 2008, despite a sharp drop-off in activity during the latter part of 2010.

Foreclosure filings were reported on 257,747 properties during the month of December, a decrease of nearly 2 percent from the previous month and down 26 percent from December 2009.

It’s the biggest annual drop in foreclosure activity for any one month since RealtyTrac began publishing its foreclosure report in January 2005. December’s total filings are the lowest monthly total recorded by the company since June 2008.

Fourth-quarter activity overall dropped considerably, with filings during the October to December timeframe down 14 percent from the previous quarter and 8 percent lower than the same period last year. The fourth quarter total was the lowest quarterly total since Q4 2008.

“Total properties receiving foreclosure filings would have easily exceeded 3 million in 2010 had it not been for the fourth quarter drop in foreclosure activity, triggered primarily by the continuing controversy surrounding foreclosure documentation,” said James Saccacio, RealtyTrac’s CEO.

“Even so, 2010 foreclosure activity still hit a record high for our report, and many of the foreclosure proceedings that were stopped in late 2010 — which we estimate may be as high as a quarter million — will likely be re-started and add to the numbers in early 2011,” Saccacio added.

All the usual suspects held their spots at the top of RealtyTrac’s list of states with the highest foreclosure rates for the 2010 calendar year. The company pointed out, however, that foreclosure activity dropped 22 percent in December in the judicial state of Florida, although bank repossessions spiked more than 45 percent that month in Nevada, Arizona, and California.

More than 9 percent of Nevada housing units (one in 11) received at least one foreclosure filing in 2010, giving it the nation’s highest state foreclosure rate for the fourth consecutive year, despite a 5 percent decrease in foreclosure activity from 2009.

Arizona registered the nation’s second highest state foreclosure rate for the second year in a row, with 5.73 percent of its homes (one in 17) receiving at least one foreclosure filing in 2010.

Florida claimed the nation’s third highest foreclosure rate, with 5.51 percent of its housing units (one in 18) receiving at least one foreclosure filing during the year.

Other states with 2010 foreclosure rates ranking among the nation’s 10 highest were: California (4.08 percent), Utah (3.44 percent), Georgia (3.25 percent), Michigan (3.00 percent), Idaho (2.98 percent), Illinois (2.87 percent), and Colorado (2.51 percent).

RealtyTrac says five states accounted for 51 percent of the nation’s total foreclosure activity in 2010: California, Florida, Arizona, Illinois, and Michigan. Together these five states documented nearly 1.5 million properties receiving a foreclosure filing during the year despite annual decreases in the three states with the most foreclosure activity.

Lenders are foreclosing on homes more than ever and this forces lenders to take more and more properties to auction every day. Because more properties are going to auction and the number of buyers are very low at the auctions, its one of the best places to find properties right now.

One of the easiest ways to make quick cash is to bird dog for properties at the auction for cash buyers. You’ll be surprised at how much cash you can make quickly without any of your own cash or credit even if you have no experience in real estate at all.

For beginning investors using this strategy, the average number of hours it takes to do a deal is 8 hrs and the average profit is $3000 to $4000. That comes out to $375 to $500 per hour.

Are you now interested in making $375 per hour working part time to generate more income in your life?

Is that more than you’re making now?

At this stage of the game, the money is not the important part. It’s the investment in yourself and the experience that’s more important. In fact, it doesn’t matter if you don’t make much money on your first few deals. The experience and the practice is most important because you are learning the strategy at this point.

Here’s why:

As you get more knowledge and experience, the profit per deal goes up and the time it takes to do a deal goes down by 50%. That means after you do 2-3 deals, you should expect to be making $7000-$12,000 on average per deal with 4 hours of work. This is why it’s important to get your first 2-3 deals done fast so you can start making the $1750.00 to $3000.00 per hour. This is very real as you can see in the chart below.

Hours to Complete a Deal

The great thing about bird dogging for auction properties is the learning curve is very short. You don’t need to go take tons of classes or study for days on end taking tests and trying to get a real estate license. None of that.

Are you a “go getter” and a “take action” type of person like I am?

Then you’ll probably want to do this full time. Think about how much you’ll make when you put in a full time week of 20 hours at $1750/hr. Because of the state of the real estate market and the number of foreclosures happening as shown above, the deals are unlimited, meaning you can decide how much you want to make by referring to the chart above.

You decide how many hours you want to work.

You decide how many deals you want to make.

You decide how much you make!