A perfect example of people not wanting to pay loans that are above the value of the house popped up on the front page of my Sun paper this morning:
sunspot.net
It seems here in Baltimore City that a lot of people paid a lot more for houses than the houses were sold to several real estate investors just a short time before. FHA gave them loans on the new sale price (the houses were appraised at that new value) and the former administration promised to "do something" about the difference between the loans and the property values. I guess that the government wants to get into the business of deciding what is a reasonable and fair profit for the real estate investor who "flipped" the homes.
Just think, maybe people who paid $300 for AMZN stock that someone else paid $100 just a month before could get the government to make up the difference now that the stock has fallen way below what they paid.
Needless to say, the current administration hasn't moved on these promises to "do something".
The home owners forgot the basic tenet of buying any major purchase, you look at comparable prices before you buy and you stop looking at prices after you bought. If you keep looking after you buy you will surely find out you paid too much and will be unhappy. Who wants to live in a house when they feel like they've been had?
William C. Apgar, an assistant secretary of HUD and head of the FHA, got a standing ovation in May when he announced the HUD effort to help victims of property flipping - the purchase of a home and quick resale at a huge price increase.
"The dumbest thing HUD could do is to insure at $100,000 today a home that sold a month ago for $50,000," Apgar told a meeting of a national task force on predatory lending.
"We've done it, but we're gonna stop."
And, he added, buyers who are trapped in inflated deals would be helped. Among other things, mortgages would be reduced to the actual value of the house. |
