Got A Hundred Bucks? Buy A Home (Or Virtually Anything Else) Using 2,000x Non Recourse Leverage

Tyler Durden's picture

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.

From DSNews:

HUD has approved a program aimed at putting foreclosed homes back into the hands of owner-occupant buyers.

 

In select states, from now into October of next year, buyers need a down payment of only $100 to purchase a HUD-owned REO home.

 

The buyer must be an owner-occupant, utilizing financing insured by the Federal Housing Administration (FHA). Standard FHA underwriting guidelines apply, and the sale must be for the full amount of the current list price.

 

The $100 down payment incentive program has been approved for two of HUD’s four national regions – the regions managed by the Denver Homeownership Center and the Atlanta Homeownership Center. HUD homes in the states listed, as well as the Caribbean are currently eligible for the program.

The states in which this scheme will work:

Denver Homeownership Center’s Jurisdiction:

    Arkansas
    Colorado
    Iowa
    Kansas
    Louisiana
    Missouri
    Minnesota
    Montana
    Nebraska
    New Mexico
    North Dakota
    Oklahoma
    South Dakota
    Texas
    Wisconsin
    Wyoming
    Utah

Atlanta Homeownership Center’s Jurisdiction:

    Alabama
    Florida
    Georgia
    Kentucky
    Illinois
    Indiana
    Mississippi
    North Carolina
    South Carolina
    Tennessee
    Caribbean

It goes on:

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.

 

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.

 

MMREM is under contract with HUD to assist with disposition sales of its repossessed homes. MMREM handles properties throughout 16 states, or about a third of HUD’s REO portfolio.

 

With an FHA 203k loan, “buyers can find a property that needs some TLC, fix it up however they want to, and finance the whole thing for $100,” Martin explained.

 

“MMREM is excited to work with this recent initiative, in a way that it supports putting HUD homes back into the hands of homeowners,” Martin said.

For those who think there has to be a snag somewhere in the fine print, because "there is no such thing as a free home" well... no:

In addition to $100 down instead of FHA’s typical 3.5 percent down payment, HUD says it will also cover up to 3 percent of the closing costs in most cases.

And then they wonder where the source of all this inflationary pressure comes from...

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css1971's picture

America is a wonderful place.

 

We never get anything like that here.

 

sqz's picture

You know ... sometimes I really did wish I lived in the US just for the amount of fun I could have! Forget risk, Live Life to the Max :)

eureka's picture

US is so way ahead of EU.  No One can blow bubbles like US.  US Rules.

MillionDollarBonus_'s picture

Owning a house is a HUMAN RIGHT, and elected officials are responsible for providing people with the opportunity to buy a house. EVERYBODY should be able to own a house, not just a few rich elites. For those smart ass libertarians who disagree, I would like them to provide just ONE example of an item that everybody owns which is NOT provided by the government.

end da fed's picture

actually, i think the govt believes they own our children too. hence, the leveraging of our children's future earnings via the national debt

Bwahaha WAGFDSMB's picture

No no, your children own themselves.  Self ownership is the first axiom of private propertyism.

whstlblwr's picture

Fuck off. I guess enough yell about bailout to Wall Street so they throw us bone. Meanwhile the savers are screwed again. This will keep the house prices too high, trap us into debt.

AmCockerSpaniel's picture

At zero interest what will the monthly payments be? It's not the price of the house, it's all about the monthly payment.

Aguadulce's picture

$100 is 20% down in Detroilet. At least that city will be saved....

i-dog's picture

"trap us into debt"

Yep. For just $100 you too can trade your freedom for debt slavery. Hurry...while stocks last!!

bnbdnb's picture

Man, you say some really weird shit.

whstlblwr's picture

He's try to be funny. Ha ha ha [yawn]

Piranhanoia's picture

That would cause vast employment and growth.

UP Forester's picture

Well, it sure as hell isn't FRNs, your life or any property.

Anybody?

Dick Fitz's picture

Good one, M$B.

You've overplayed your hand too many times, though. It was cute the first few times, but you've posted too many things that are so out of left field that the schtick is over. It's become annoying.

Just admit you're a Ron Paul supporting anarchist/libertarian who believes that gov't is just a mob that gets to control all the guns and get it over with. With your wit and intelligence, I'm sure you could provide actual insight and input into the discussion instead of just stirring shit.

Temporalist's picture

I think MDB is providing a public service.  It's useful to point out hypocrisy with sarcasm.

Almost Solvent's picture

MDB is a master of the deadpan comic delivery

Astute Investor's picture

Owning a house is a HUMAN RIGHT, and elected officials are responsible for providing people with the opportunity to buy a house. EVERYBODY should be able to own a house, not just a few rich elites.

 

What a quaint observation.  Unfortunately, you fail to realize that any home purchaser utilizing 100% non-recourse leverage "owns" NOTHING!  They are nothing more than renters for all practical purposes, except they enjoy using OPM to create the illusion of wealth.  2,000x leverage only ensures that the taxpayer will be left holding the bag.

FeralSerf's picture

If you buy one of these jewels, maybe you can hire your unemployed kids and/or in-laws that are hanging around the house as the "contractors" to make the "necessary improvements".

The $100 down payments should  just about be the full prices of some of the HUD inventory in Detroit.

Taint Boil's picture

 

 

$100 might be a little on the high side Detroit Homes go for about a buck - no joke.

quacker's picture

Then we must eliminate property taxes. Otherwise we have a HUMAN RIGHT that is taxed by local governments, and if you don't pay up your human right gets confiscated. Your human right gets auctioned off by the county and someone steps in and buys your human right at auction on the cheap.

And how about eminent domain where the local governmet can take away your human right to build a shopping mall.

Uh oh .. what to do .. MDB loves property taxes and eminent domain ... just the thought of them makes him touch himself .. and yet he just declared owning a home as a human right ... Ben help!!

AmCockerSpaniel's picture

Any government has to be funded. If not property taxes, then what will be taxed? We all know about death and taxes.

pods's picture

Tariffs and sales taxes are not unconstitutional or immoral.  But to tax a man's labor or the product of that labor (property) is.

pods

fxrxexexdxoxmx's picture

Utill that goverment uses guns to enforce the funding. At that point LEO's are nothing more than thugs who take from others to put money into their pocket.

Sales taxes, tariffs or transaction fees do not require a person with gun.

FeralSerf's picture

Dick Cheney said Reagan proved that deficits don't matter.  They don't need to tax.  They can just borrow.  Or print.  It's the American Way.

Freewheelin Franklin's picture

In an intentional, perpetual, creeping monetary inflationist scheme, taxes are merely a curb on future price inflation, according to Melchior Palyi. 

mt paul's picture

bake sales

700 $ chocolate chip cookies

10k apple pies..

fund that government 

in no time..

cranky-old-geezer's picture

 

 

What a fucking moron.

Excise taxes (sales taxes) are constitutional and morally proper.  They are one-time taxes with no further tax obligation hence no ability to steal the property later on.

Property taxes are unconstitutional and morally disgusting.  They're ongoing taxes allowing legalized theft of the property if not paid.

High taxes aren't the solution.  Small government and low government spending is the solution.

Small government can live on sales taxes easily.

nmewn's picture

"For those smart ass libertarians who disagree, I would like them to provide just ONE example of an item that everybody owns which is NOT provided by the government."

Where are all these wonderful government factories churning out all the items you claim are provided by it?

Business must be booming in that monopolistic endeavor you love so much...are they hiring? If not, why not?

They're greedy aren't they? ;-)

FeralSerf's picture

That wonderful government factory is in Washington DC.  It's called the Bureau of Engraving and Printing.  You can trade their product for just about anything you might want.  How cool is that?

They might be hiring too.  I hear they're pretty busy.

4 wheel drift's picture

Owning a house is a HUMAN RIGHT, and elected officials are responsible for providing people with the opportunity to buy a house. EVERYBODY should be able to own a house, not just a few rich elites.

LOL !!  this ideotology is precisely what got us in this mess in the first place......   EVERYBODY should own a house ??   how about the ones who do NOT want, or simply cannot afford the responsibility that comes with ownership...

it is small napoleons like YOU who think of dictating how we all must live and what standards ought to apply to EVERYBODY who create these impossible scenarios upon which the politicos prey on the idiots so they can be elected by promising all these nirvanas that the Free $hit Army demands so much.....   except that they can never deliver, since nirvana is just that....   an impossible dream

it is precisely the shit you spouse here that such and such is A MUST for EVERYBODY.....   and when they cannot deliver as most of these promises are undeliverable.....  yes, the shit hits the fan....  except that the shit in this instance is so large and stinky  we will have to live with the idiocy for YEARS.......   roflmao......      indeed we deserve the leaders we get, for it is precisely this idiocy of chicken in every pot mentality of entitlement that it is so damned easy to harvest by the pathological liars that politicians are.....   they just need a few of your type to have the populi believe that this crap is actually possible and then have the gall to believe there will be NO consequences ......     geeeezuz h krist   what bullshit

For those smart ass libertarians who disagree, I would like them to provide just ONE example of an item that everybody owns which is NOT provided by the government.

hmmm  well, how about the FREEDOM of CHOICE to be far, far, far away from this ole US of A so when the shit really explodes one will be away from the madness....  as in... for now....  i am so glad i am not in NYC or in ANY other major city where the Free $hit Army members outnumber those who are not begging where the next meal is coming from.... and then comeback to pick up the pieces really cheap....   once these masses have been boiled and plucked for their idiotic usefulness......

as i said before.... fuck the free $hit army and their keynesian priests of doom       revolting really.....    i look forward to the hollocaust of the arseholes  only then we may be able to be free from blood suckers entitled to get something for nothing.

 

Freewheelin Franklin's picture

For those smart ass libertarians who disagree, I would like them to provide just ONE example of an item that everybody owns which is NOT provided by the government.

 

You got me. Everything I own was purchased with government fiat currency. Therefore, since the government provided the currency, through the Federal Reserve, everything purchased with that currency was indirectly provided by the government.

 

BINGO, bitchez.

Ura Bonehead's picture

Owning a house is a HUMAN RIGHT

Barack?  Is that you??

Phil Free's picture

People, this IS MDB we're talking about here.  Remember -- the living archetype for 'Troll'?  He/she/it should be fully expected to say the most inane, inflaming things possible.  No need to fall hook, line, and sinker for his bait.

 

pupton's picture

It seems like they are willing to try anything but let the market do it's job. Let the failures fail, and the winners prosper. Enough of these stupid centrally planned boondoggles aimed at making people buy property nobody wants at the price the banks can live with. If you have no offers, your price is too high. Let the market price discovery happen now, instead of dragging this out for years.

Tortfeasor's picture

And why would I want to take over someone's WAAAAY OVERPRICED payment?  It doesn't work in car loans, it won't work for properties either. 

Gene8696's picture

Crack Houses bought by their occupants... None of those $100 HUD giveaways in my neighborhood.

Gringo Viejo's picture

What a Country! Just 30 years ago my brother Alexis and I were running from the Tanks together! Now, for a $100, we can party with cool Amerian chicks!

NoBull1994's picture

unfuckingbelievable

Duuude's picture

 

Completely believable, Hopey is buying votes...

 

Class warfare...anybody?

 

 

 

 

slewie the pi-rat's picture

quick!  loan me $100!

i want to try this out! 

BigJim's picture

... and if you lend me that $100 ten times, I can borrow $2,000,000. And pay you back, obviously

In fact, I'll lend you half the borrowings, and then you can borrow $2,000,000,000 and pay me back. Or something.

CPL's picture

You understand what you just typed out is completely possible and that we should all be throwing $100 in a pot together and buy Vegas.

 

Why go for a house when an entire bankrupt town is available.  We'll rotate days where we get to be boss hog.

HungrySeagull's picture

Now ain't that sum'tin...

 

HEY ROSCOE! CLETUS!!!