IPFS News Link • Housing
IPFS News Link • Housing
Today's adjustment to the government's HARP program to get anything with
a pulse as close to the discount window as possible was not the only
proposal to revive the moribund US housing market. According to a new
proposal by HUD, beginning this month and continuing for a year, anyone
with a just $100 will be allowed to buy a HUD-owned REO home. In
essence: the new buyer is merely taking over the mortgage payments in a
repeat of what happened in 1970s New York along the Central Park West
corridor. Granted for now it is stricly limited to only... 28 states!
But it gets better: "HUD’s $100 down payment incentive program can
also be applied to an FHA 203k loan, which can be used to fund repairs
and renovations on the home. The 203k program allows buyers to finance
both the mortgage and additional money for rehabilitation needs with a
single government-insured loan." Said otherwise, a $100
downpayment gives one unlimited degrees of freedom how to spend
non-recourse, massively levered capital, and courtesy of money's
fungibility, to even fund, shhh, the occasional iPhone. "Matt
Martin, CEO of Matt Martin Real Estate Management (MMREM), says this is
one of the most exciting features of the new incentive program and
should drive a lot of exposure to FHA’s 203k offering." Why of course it
is: it will only take enterprising Americans a few weeks to realize
that the latest HUD program is basically an EFSF in sheep's clothing,
which provides US consumers with a Benjamin in their pocket, the ability
to lever up by a factor of about two thousand (or more) and use the
proceeds for pretty much anything (but make sure to call it "home
repairs"). And when the HUD is stuck with hundreds of billions of
non-performing, delinquent loans, what then? Why the same that will
happen to the EFSF: another wholesale taxpayer funded bailout... of
those who were tricky enough to figure out this latest subsidy of the
global retailer base.