Can Home Flippers Succeed Where Loan Modifications Have Failed?
Loan Modification programs like HAMP were set up with the goal of providing financial stability to the housing industry. A crippled Real Estate market affects everyone, even people who are not struggling with their mortgages. Neighborhoods get run down, house prices drop, and house service provides like builders, plumbers, electricians and pool cleaners also feel the pinch.
The numbers show that loan modifications and the programs that promote them are not providing the solution hoped for. Could house flippers provide the stability that lenders, servicers and the government have failed to deliver?
First, what is a house flipper? It is an investor that buys a home with the sole purpose of quickly reselling it. This practice is often restricted on homes that have received some kind of government subsidy. House flipping is an industry in its own right. Investors are always looking out for bargains they can quickly resell. During the housing boom everybody was doing it. Even rookies that had never bought a house before were making a profit from buying a house making some small (or large) improvements and selling it again. Now, deep in the financial and housing crisis it is certainly not a game for amateurs. However, professional are doing just great, in fact they are making more of a profit than ever before.
House flipping is one of the few housing sectors that are still booming. On a national level the number of flipped homes increased by 19%, and there is still time for this figure to grow even more before the end of the year.
House flipping has often been considered a scourge of the housing industry, made up of ruthless investors out to make a profit from troubled borrowers. Now, many hail them as financial heroes that are injecting much needed cash into homes and neighborhoods hard hit by the crisis. This practice is also helping to clear out properties from moribund housing markets that are suffering from the raise in foreclosures.
House flipping also generates business for carpenters, builders and other home service providers that are contracted to clean up old homes in need of maintenance. It has also created new jobs like that of a “runner” or a “driver”, who are used to check out homes that are going to be auctioned off and inform potential buyers if they are occupied, what condition they are in, what the neighborhood is like, and other relevant information.
Such are the benefits of house flipping to the housing market that the Federal Housing Authority is considering a one year waiver on anti-flipping regulations. This will allow buyers to purchase foreclosed homes form owners that have owned the property house for less than 90 days. This will help first time buyers get their hands on renovated properties at lower prices.
Could this be a case of digging our way out of a financial crisis by helping people make money instead of just passing on handouts? Granted house flipping will not help troubled borrowers keep their homes, but it might help the housing market recover faster and reduce the negative effects of the current housing crisis.
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- My Loan Modification Failed, How Soon Can I Buy A New Home After A Foreclosure
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