What do you think about what Oliver has to say in the video?

Now, the government is seeking a way to deal with these properties. According to an article in the Riverside, California Press Enterprise, the feds are “evaluating various proposals to encourage lenders or investors to convert foreclosed homes to rentals.”

Do you smell the money yet? This means deal opportunities for us real estate investors. Let’s look at some of the details.

Subsidies to Investors to Buy Foreclosures?

Fannie Mae and Freddie Mac may soon start offering subsidies to investors who buy foreclosures, said Jared Bernstein, an economist and former member of the White House finance team.

The Neighborhood Preservation Act

Another proposed option was legislation introduced in Congress last week. This bill would allow the two agencies to “rent out foreclosed houses for up to five years.” Named the Neighborhood Preservation Act, the owners or new tenants could lease the property instead of it going on the market or up for sale. This strategy had favor with the local government in this article and less favor with economists who think the government should get out of the mortgage business.

Where Does the White House Stand?

The White House seems to be more in favor of investors handling the foreclosure rentals than the federal government. According to Bernstein, “The basic idea is for Fannie and Freddie to move their foreclosed properties onto the rental market as opposed to the housing market until prices rebound.

And according to the article, homebuyers have received preference from Fannie and Freddie over investors. Right now, Freddie Mac sells about one-third of its foreclosures to investors.

What This Means for Real Estate Investors

• There may be less room for negotiation on price.
• You should start approaching distressed sellers facing foreclosure.
• You may be able to prolong major property improvements before selling.
• Rentals are in demand for at least the next two to three years, so rental income will be strong.
• Foreclosures will be increasing in the coming months as legal concerns with the process are ironed out.

Stay tuned to The Investor Insights blog this month to find out more about finding deals.

Foreclosure or REO investing is here to stay folks. Between the existing shadow inventory and the new filings, now’s the time to take advantage of this amazing buying opportunity!

To learn more about investing in REO’s visit Buying Bulk REO.

And, if you’re a real estate investor, it’s important to help protect consumers from scams. As an investor you must negotiate short sales appropriately under the new MARS ruling from the FTC.

FTC Chairman Jon Leibowitz says, “At a time when many Americans are struggling to pay their mortgages, peddlers of so-called mortgage relief services have taken hundreds of millions of dollars from hundreds of thousands of homeowners without ever delivering results. By banning providers of these services from collecting fees until the customer is satisfied with the results, this rule will protect consumers from being victimized by these scams.”

Who are the scammers?

The FTC calls them bogus operations that in exchange for an upfront fee will negotiate with a homeowner’s mortgage lender to get one of the following – a loan modification, a short sale or other relief from foreclosure.

These groups often claim to be affiliated with a government agency or the government housing assistance programs.

What does this mean to real estate investors?

Some of the work you do to get deals requires that you negotiate with a homeowner to do a loan modification or short sale. The easiest way to be in compliance is to know what you can and can’t do in negotiations.

The biggie is that you can’t charge an up-front fee. That’s fairly simple, don’t you think? I think it is. I mean you’re trying to get a deal, not $100 quick bucks.

Here’s what that quick money could turn into – mega fines in the ballpark of $11,000 per occurrence and $11,000 per day that you are in violation.

Here’s the breakdown of the rules.

Advance Fee Ban

• You can’t collect fees until you have provided the homeowner a written offer from their lender or servicer that the consumer deems acceptable.
• The mortgage holder must provide a written document describing the consequences of accepting the offer.
• You must also remind consumers that they have the right to refuse the offer – without any fees.

Disclosures
In all of your communications, your company must disclose the following:

1.     You are not associated with the government or endorsed by the government.

2.     The lender can refuse to modify the homeowner’s loan.

3.     If a homeowner stops paying their mortgage, they could lose their home and damage their credit.

4.     The homeowner can walk away from the deal at any time before accepting the lender or servicer’s offer AND that they are not required to pay your negotiation fee.

5.     Your fees for negotiating the terms of the short sale or loan modification.

What You Can’t Claim

• the likelihood of consumers getting the results they seek;
• the company’s affiliation with government or private entities;
• the consumer’s payment and other mortgage obligations;
• the company’s refund and cancellation policies;
• whether the company has performed the services it promised;
• whether the company will provide legal representation to consumers;
• the availability or cost of any alternative to for-profit mortgage assistance relief services;
• the amount of money a consumer will save by using their services; or
• the cost of the services.

A Big No-No
If you tell your prospective homeowner customer to stop communicating with their lenders or servicers, you’re in violation.

Your Pitch

If you claim that you can help a homeowner, the FTC says you have to have “reliable evidence” of your claims about the benefits, performance or effectiveness of how you negotiate.

Where Do These Rules Apply Most?

There are two scenarios where these rules apply most – subject to and carry back loans. In both cases, you are either taking over financing or making a loan modification. You need to follow the rules and you’ll be fine.

Check out the entire FTC ruling here. Stay informed with the Investor Insights by signing up for email notifications.

Not only have first-time buyers responded overwhelmingly to the opportunity to buy “turnkey” renovated homes with low down payments, she said, but they have performed well on their mortgage obligations.

“Obviously we have concerns about flipping in general,” Bott said, but the FHA has seen none of the fraud problems, defaults and re-foreclosures that cost the agency millions in insurance payouts in earlier years.

Hmm. Maybe, based on this data, the government will finally realize that investors are more valuable in an economic recovery than they previously thought.