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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:

    New Mexico
    North Dakota
    South Dakota

Atlanta Homeownership Center’s Jurisdiction:

    North Carolina
    South Carolina

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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Mon, 10/24/2011 - 17:56 | 1806118 css1971
css1971's picture

America is a wonderful place.


We never get anything like that here.


Mon, 10/24/2011 - 18:01 | 1806140 sqz
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 :)

Mon, 10/24/2011 - 18:05 | 1806151 eureka
eureka's picture

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

Mon, 10/24/2011 - 18:14 | 1806186 MillionDollarBonus_
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.

Mon, 10/24/2011 - 18:18 | 1806203 shortus cynicus
shortus cynicus's picture

I own my children.

Mon, 10/24/2011 - 18:27 | 1806223 end da fed
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

Mon, 10/24/2011 - 18:40 | 1806272 kreso
kreso's picture

Dear Gentlemen,

Kind Regards,

Tue, 10/25/2011 - 00:43 | 1807130 Bwahaha WAGFDSMB
Bwahaha WAGFDSMB's picture

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

Tue, 10/25/2011 - 14:09 | 1809218 Ura Bonehead
Ura Bonehead's picture

Well, my children own me.

Mon, 10/24/2011 - 18:27 | 1806206 whstlblwr
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.

Mon, 10/24/2011 - 19:53 | 1806440 donsluck
donsluck's picture


Mon, 10/24/2011 - 20:15 | 1806508 AmCockerSpaniel
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.

Mon, 10/24/2011 - 21:36 | 1806768 Aguadulce
Aguadulce's picture

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

Mon, 10/24/2011 - 21:28 | 1806743 i-dog
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!!

Mon, 10/24/2011 - 18:21 | 1806211 bnbdnb
bnbdnb's picture

Man, you say some really weird shit.

Mon, 10/24/2011 - 18:23 | 1806216 whstlblwr
whstlblwr's picture

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

Mon, 10/24/2011 - 18:21 | 1806212 Piranhanoia
Piranhanoia's picture

That would cause vast employment and growth.

Mon, 10/24/2011 - 18:21 | 1806214 UP Forester
UP Forester's picture

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


Mon, 10/24/2011 - 19:53 | 1806442 donsluck
donsluck's picture


Mon, 10/24/2011 - 18:28 | 1806242 Dick Fitz
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.

Mon, 10/24/2011 - 19:09 | 1806342 Temporalist
Temporalist's picture

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

Mon, 10/24/2011 - 19:41 | 1806409 Almost Solvent
Almost Solvent's picture

MDB is a master of the deadpan comic delivery

Mon, 10/24/2011 - 18:56 | 1806302 Astute Investor
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.

Mon, 10/24/2011 - 19:54 | 1806447 donsluck
donsluck's picture


Mon, 10/24/2011 - 20:58 | 1806643 FeralSerf
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.

Mon, 10/24/2011 - 21:29 | 1806724 Taint Boil
Taint Boil's picture



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

Mon, 10/24/2011 - 19:30 | 1806334 quacker
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!!

Mon, 10/24/2011 - 20:20 | 1806521 AmCockerSpaniel
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.

Mon, 10/24/2011 - 20:33 | 1806553 pods
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.


Mon, 10/24/2011 - 21:02 | 1806650 fxrxexexdxoxmx
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.

Mon, 10/24/2011 - 21:02 | 1806652 FeralSerf
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.

Tue, 10/25/2011 - 06:46 | 1807393 Freewheelin Franklin
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. 

Mon, 10/24/2011 - 22:33 | 1806890 mt paul
mt paul's picture

bake sales

700 $ chocolate chip cookies

10k apple pies..

fund that government 

in no time..

Tue, 10/25/2011 - 01:25 | 1807188 cranky-old-geezer
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.

Mon, 10/24/2011 - 19:40 | 1806406 nmewn
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? ;-)

Mon, 10/24/2011 - 21:07 | 1806668 FeralSerf
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.

Mon, 10/24/2011 - 21:54 | 1806795 4 wheel drift
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.


Tue, 10/25/2011 - 06:42 | 1807386 Freewheelin Franklin
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.

Tue, 10/25/2011 - 14:07 | 1809209 Ura Bonehead
Ura Bonehead's picture

Owning a house is a HUMAN RIGHT

Barack?  Is that you??

Wed, 10/26/2011 - 20:32 | 1814998 Phil Free
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.


Mon, 10/24/2011 - 19:10 | 1806350 pupton
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.

Mon, 10/24/2011 - 19:54 | 1806446 Tortfeasor
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. 

Mon, 10/24/2011 - 20:22 | 1806526 Gene8696
Gene8696's picture

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

Mon, 10/24/2011 - 22:51 | 1806936 Gringo Viejo
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!

Mon, 10/24/2011 - 17:57 | 1806120 NoBull1994
NoBull1994's picture


Mon, 10/24/2011 - 18:26 | 1806221 Duuude
Duuude's picture


Completely believable, Hopey is buying votes...


Class warfare...anybody?





Mon, 10/24/2011 - 17:57 | 1806127 slewie the pi-rat
slewie the pi-rat's picture

quick!  loan me $100!

i want to try this out! 

Mon, 10/24/2011 - 18:05 | 1806153 BigJim
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.

Mon, 10/24/2011 - 19:09 | 1806346 CPL
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.

Mon, 10/24/2011 - 19:26 | 1806381 HungrySeagull
HungrySeagull's picture

Now ain't that sum'tin...



Mon, 10/24/2011 - 19:45 | 1806419 Rynak
Rynak's picture

That would be just awesome - fuck the system with its own fucked up means.

I mean, think about that.... not even banks get this degree of leverage. So, unless the unlaw were to interfere, you really got a WMD here. Unfortunatelly, there will be intereference as soon as people would do smth like that.

Mon, 10/24/2011 - 18:48 | 1806291 derek_vineyard
derek_vineyard's picture

You have to earn and save $100 to be eligible to be part of this windfall.  Unfortunately 99% of people cant save the 100,

Mon, 10/24/2011 - 19:56 | 1806448 tom a taxpayer
tom a taxpayer's picture


Waiver of $100 down payment:

Buyers of houses that are or will be the locus of employment for one or more single women shall receive a waiver of the $100 down payment, provided that the local HUD administrator has visited the house and certified that each single woman has demonstrated her ability for gainful employment.

FHA regulation 69A-subpart D2.4.


Mon, 10/24/2011 - 21:20 | 1806711 mjk0259
mjk0259's picture


Mon, 10/24/2011 - 21:41 | 1806777 tom a taxpayer
tom a taxpayer's picture

"Prostitutes" has a negative connotation. Better to say:"Ladies of the night", or "Liberators of Men", or "Stress Relievers", or "Sexual Healers", or...

Mon, 10/24/2011 - 19:37 | 1806396 fuu
fuu's picture

I'll send you $100 in Barber Quarters and you can get 22 of them.

Villa de Slewie.

Mon, 10/24/2011 - 18:00 | 1806130 Hansel
Hansel's picture


Mon, 10/24/2011 - 20:02 | 1806473 nedwardkelly
nedwardkelly's picture

Cmon man!

HUD homes in the states listed, as well as the Caribbean are currently eligible for the program.

A benjamin gets you a home in the Caribbean! America, Fuck yeah!



Mon, 10/24/2011 - 20:15 | 1806507 kaiserhoff
kaiserhoff's picture

No worries, Mate.

They'll allocate 2 billion to this, 1.95 billion for administrative costs, and the rest..., you've heard of walking around money on election day?

Mon, 10/24/2011 - 18:00 | 1806131 Downtoolong
Downtoolong's picture

The 203k program allows buyers to finance both the mortgage and additional money for rehabilitation needs with a single government-insured loan.

And so, the going rate to have your brother in laws construction company hang a new closet door just went to $50,000.  Welcome to fraud central.

Tue, 10/25/2011 - 06:04 | 1806158 BigJim
BigJim's picture

That closet just happens to have a door made of 0.9999 silver.

Mon, 10/24/2011 - 18:32 | 1806251 TJ00
TJ00's picture

No, the invoice is for a $50,000 closet door, actually the door is free with that amount of wholesale drugs which you can sell out of your $500 Detroit house you are 'renovating'.

Mon, 10/24/2011 - 18:00 | 1806132 ebworthen
ebworthen's picture

Phew!  Just in time.  Milk went from $1.98 a gallon to $2.98 a gallon and they said there was no inflation.

You think I could pay health insurance premiums with that loan?  Those have gone up 15% a year for ten years.

This is just bubblelicious as it gets; I'd say it's bullish for appliance, car, and Viagra sales - bearish for anyone below generation X.

Mon, 10/24/2011 - 18:15 | 1806191 derek_vineyard
derek_vineyard's picture

Because of food inflation I have had to modify my diet to eat the most abundant and least expensive food: bull shit.

Mon, 10/24/2011 - 18:20 | 1806210 i love cholas
i love cholas's picture

eat ipads.

Mon, 10/24/2011 - 19:11 | 1806352 surfer433
surfer433's picture

Just eat your peas.

Mon, 10/24/2011 - 20:05 | 1806482 nmewn
nmewn's picture

Any guarantee on Granny's check?

Mon, 10/24/2011 - 20:12 | 1806496 HungrySeagull
HungrySeagull's picture

The damn half and half costs more the stupid milk.

Mon, 10/24/2011 - 18:00 | 1806133 in4mayshun
in4mayshun's picture

Let's just start providing free everything for everyone and just get it over with.

Mon, 10/24/2011 - 20:16 | 1806489 nmewn
nmewn's picture

Swimming pools are a human right!!!

Mon, 10/24/2011 - 18:01 | 1806135 arizona11912
arizona11912's picture

Some people never learn. There will be plenty of gullible sheep lining up to be financially slaughtered over time.

Mon, 10/24/2011 - 18:23 | 1806218 topcallingtroll
topcallingtroll's picture

If these really are non recourse loans there is no downside risk

Fannie and Freddy....running the largest rent to own real estate business in the country.

Although paying full list price is probably a rip off. That is a very expensive put.

Mon, 10/24/2011 - 20:40 | 1806577 pods
pods's picture

Yeah, the loans assumed are still probably front loaded with interest, so figure a schmuck pays 3 years of payments before defaulting.  Bingo, more interest paid and zero equity built.

Just another way to let the sheep hang themselves.  The houses sure are not going to appreciate, as the inevitable rise in interest will cause the value to plummet.  

Think of it as a Dumber Man's Lottery.


Tue, 10/25/2011 - 15:31 | 1809554 blindside
blindside's picture

Only the dumber man actually falls for this. The smart man buys the property and takes out a huge 203K loan to 'renovate it - maybe he buys himself some gold or pays of his house note instead. Then he doesn't make the first payment and lets the house and 203K loan go into default.

Takeaway: free houses, PMs, or other goodies. Short the banks, buy CDSs (but don't get left holding the bag).

Do I about have that right?



Tue, 10/25/2011 - 15:48 | 1809556 blindside
blindside's picture



Mon, 10/24/2011 - 18:00 | 1806136 legal eagle
legal eagle's picture

Get down to the corner and get a Pay Day "loan" to fund the down payment!

Mon, 10/24/2011 - 18:01 | 1806138 Fluffybunny
Fluffybunny's picture

Sorry, what?

Mon, 10/24/2011 - 18:02 | 1806142 funthea
funthea's picture

I want me... a free house.

Mon, 10/24/2011 - 18:03 | 1806143 Bill D. Cat
Bill D. Cat's picture

It almost sounds too good to be true .... sign me up for ten .

Mon, 10/24/2011 - 18:03 | 1806144 ReallySparky
ReallySparky's picture

So in two years we start to read all the stories of mismanagment and theft that occured with this program.  BREAKING: Action news at 5... prosecutors and police file charges against greedy con men that took advantage of mortgage program to help the unemployed, homeless, (insert heart wrenching word here), people of our great country.

Mon, 10/24/2011 - 18:04 | 1806148 Fluffybunny
Fluffybunny's picture

Are you sure this is legit? This sounds... like an april fools joke.

Mon, 10/24/2011 - 18:09 | 1806164 BigJim
BigJim's picture

That was my first thought too!

And then I realised that was why it must be real - you couldn't make this shit up.

Mon, 10/24/2011 - 18:37 | 1806263 NotApplicable
NotApplicable's picture

Remember, it's vote buying season.

Mon, 10/24/2011 - 18:04 | 1806149 Gubbmint Cheese
Gubbmint Cheese's picture

line up everyone!

I am happy to announce that the Government is giving out free blowjobs...

they will be provided to you by the person standing to your right.



Mon, 10/24/2011 - 18:11 | 1806171 Sokhmate
Sokhmate's picture

I'd line up if the blowjob is administered by a ukranian nurse.

Mon, 10/24/2011 - 18:28 | 1806243 Pool Shark
Mon, 10/24/2011 - 19:06 | 1806335 Bicycle Repairman
Bicycle Repairman's picture

I was expecting Gahdaffi's Ukranian nurse.  That was mean.

Mon, 10/24/2011 - 18:46 | 1806287 end da fed
end da fed's picture

umm, isnt that discrimination or something against women. bj entitlements dont benefit us

Mon, 10/24/2011 - 18:05 | 1806152 arkady
arkady's picture

Naturally after this implodes people will line up in New York protesting the greedy bankers for misleading the poor sheep who are now even more stuck in debt than before with little to show for it. 

Damn that free market and damn that capitalism.

Mon, 10/24/2011 - 18:06 | 1806154 equity_momo
equity_momo's picture

Non recourse? Wtf?

Mon, 10/24/2011 - 18:27 | 1806230 topcallingtroll
topcallingtroll's picture

Non recourse is what you want.

They can't come after your personal assets in case of default. Their only recourse is to take the house.

Mon, 10/24/2011 - 19:45 | 1806418 equity_momo
equity_momo's picture

I know that. Hence my shock. This is epicly stupid.

Mon, 10/24/2011 - 19:59 | 1806460 donsluck
donsluck's picture


Mon, 10/24/2011 - 21:45 | 1806786 Virginian
Virginian's picture

Or, as G. gordon would say:  "Gollldddd!"

Mon, 10/24/2011 - 20:50 | 1806613 ToddGak
ToddGak's picture

So let's see here...

Prospective home owner ponies up a C-Note, gets himself a real nice HUD house.  Levers up and borrows $100K to fix it up.  $100K goes out into economy to support construction/home services industry.

Scenario A: home owner stays in house and makes payments.  Gov't wins.

Scenario B: home owner can't make payments on loan, defaults.  Gov't gets house back, but it's in better shape than before, since home owner fixed it up.  Gov't didn't have to worry about fixing it up themselves.  Gov't wins.

Makes sense to me!

Tue, 10/25/2011 - 00:04 | 1807087 Burnbright
Burnbright's picture

Oh contrare you forgot ;

Scenario C: due to law of unintended consequences home builders and house buyers collectively make absurd chargnes and walk away with 70%+ of the money used to do repairs to buy what they want.

Scenario D: A lot of items not traditionally thought of as home appliances or supplies for repair all of a sudden fit into that catagory when Home Depot becomes a one stop shop for every item including groceries. 

Mon, 10/24/2011 - 18:06 | 1806156 Sokhmate
Sokhmate's picture

I'd fund Krugies and Mapies with that money.

Mon, 10/24/2011 - 18:13 | 1806180 lunaticfringe
lunaticfringe's picture

Ok krugie maybe, but mapie?

Mon, 10/24/2011 - 18:07 | 1806160 Poetic injustice
Poetic injustice's picture

So everybody with 1000 in pocket now is millionaire?
Phew, that was easy to do, and no inflation from this, nosssir!

Mon, 10/24/2011 - 18:08 | 1806162 Sokhmate
Sokhmate's picture

do i qualify if unemployed but got 1 benji in my undies?

Mon, 10/24/2011 - 18:40 | 1806274 quartshort
quartshort's picture

We have a winner! Care to trade those tighty-whities for two?

Mon, 10/24/2011 - 20:30 | 1806546 Sokhmate
Sokhmate's picture

where u wanna meat?

Mon, 10/24/2011 - 18:11 | 1806163 bob_dabolina
bob_dabolina's picture

Do I have $100 and 2,000x leverage? 

 Does a bear shit in the woods? Does a toy horse have a wooden dick? 

Let's play ball bitchez!

Mon, 10/24/2011 - 18:09 | 1806165 Bastiat
Bastiat's picture

A buddy said, over five years ago:  "In the end they'll just send everyone a check for a $100K -- we're getting there fast.  Lever up with a non-recourse loan and buy PMs!

Mon, 10/24/2011 - 20:00 | 1806465 donsluck
donsluck's picture


Mon, 10/24/2011 - 21:49 | 1806792 Virginian
Virginian's picture


Mon, 10/24/2011 - 18:09 | 1806167 Fanatic
Fanatic's picture

You have to be living in the house already, right (owner-occupier)?

Mon, 10/24/2011 - 18:29 | 1806244 topcallingtroll
topcallingtroll's picture


You just have to plan to live in it.

Mon, 10/24/2011 - 18:11 | 1806170 LawsofPhysics
LawsofPhysics's picture

The paperpushing fucknuts and their politcian puppets are getting desperate.  The answer to too much debt as a result of massive, greed-driven, irresponsible lending and fraud is....  wait for it...



Mon, 10/24/2011 - 18:13 | 1806181 LawsofPhysics
LawsofPhysics's picture

Notice, this is for crappy housing only, meant to drive more money into the RE fuckers coffer.  Make the same deal on arable land, go ahead, I dare you.

Mon, 10/24/2011 - 18:13 | 1806182 bankruptcylawyer
bankruptcylawyer's picture

um does this mean if the house is foreclosed upon you can buy your own home back at the foreclosre list auction price--- which is set by the bank---as a fictional price because your home was never actually auctioned before you filled out paperwork to foreclose and buyback---- for 100 bucks? and the bank gets paid by the hud who then owns your loan?

so its a debtor jubille paid for not with capitalist risk realization by investor banks ( and the cascading creditor trannches holding the mbs) , but by near-communist state owned treasury sucking gse's.

socialism--- not for the rich--- but for the bankers and bondholders and realvestate agent sperm receptacles

Mon, 10/24/2011 - 18:41 | 1806277 NotApplicable
NotApplicable's picture

I'm no RE expert, but doesn't a bank bid up to the amount owed on the note, as it is merely an accounting transfer for them?

Mon, 10/24/2011 - 18:14 | 1806187 Waterfallsparkles
Waterfallsparkles's picture

Hud has always let Buyers finance 3% if their Closing Costs.  In Maryland you still need to have another 3 to 4% for prepaid Property Taxes, Transfeer Taxes and Stamps, Insurance, ect.

The Hud 203K loan is expensive.  You have to pay a Contracor to write up the Repairs.  The only way you get the Money for the Repairs is to make the Repairs and have and HUD inspector come out and inspect the Repair, improvement.  Then on to the next repair.  Same drill. 

This is not a new concept.  It has been around for a long time.

Mon, 10/24/2011 - 18:28 | 1806239 Tyler Durden
Tyler Durden's picture

So you are saying the contractor can not be bribed with the free money?

Mon, 10/24/2011 - 18:59 | 1806292 Waterfallsparkles
Waterfallsparkles's picture

No the Contractor cannot be bribed.  The Contractor has to be HUD approved.  Plus, Hud has a price estimate for most repairs. 

You have to also remember that the cost of the repairs go onto you final loan amount.  So, if the Carpet costs 5,000. more than the estimate you will have to pay that back over 30 years.

Basically, what happens is that a Hud Certified Home Improvement Contractor goes out to the Home and estimates the cost of the repairs needed.  This can cost around $650.  Hud will take the price you paid for the House and add the cost of the repairs to the final loan amount.  But, it is very much like a Construction loan where the Lender (Hud) has to inspect the repairs at each stage of completion.(you pay for each inspection)  You draw off the end loan amount to pay the specified Contractor at each stage of completion or each repair.

Remember that Loan Interest during the Repair process is adding up and being added to your final Loan amout.  This is an expensive loan but is a valuable tool if you want to buy a house in need of repair.

Mon, 10/24/2011 - 19:09 | 1806343 Tyler Durden
Tyler Durden's picture

So what happens when you walk away after (or before) the first mortgage payment on the carpet which costs $5,000 more than estimated (and the carpet not being nailed down goes too)?

Mon, 10/24/2011 - 19:45 | 1806384 Waterfallsparkles
Waterfallsparkles's picture

Number 1 I do not think that the Hud Home Improvement Contractor would over estimate the cost of replacing the Carpet by that much.  Remeber Hud has estimated costs for repairs.  Plus, the Contractor does not want to lose his ability to do Estimates for 203K Loans.

Number 2 if you walk away before the Carpet is nailed down the Carpet Contractor will not get paid.  The Carpet Contractor is paid thru a Draw on your Final Mortgage Balance after all repairs are made.  Hud has to inspect the installed Carpet before they will release the Money in Escrow for Repairs.  Plus, how can you walk away when there are no payments?

You are loaned the Money for the Purchase and there is an Escrow set up for the Repairs.  As the work is done the money for the Repairs is taken out of the Escrow after of course a Hud inspection of the repair and the Property and only then paid to the Contractor.

There are no Mortgage payments during the repair process.  The interest during repairs is added to your final balance after all of the repairs are made.  Once the final repairs are made your Mortgage Payments start.  But, why would you want to walk away from an almost new home?  Even if you did the improvments the condition of the Home in Foreclosure would net Hud more money than you paid for it.  Plus, you had to pay all of the Closing Costs, Transfeer Tax and Stamps, Insurance, Inspection fees, out of pocket.  About 3.5% of the value of the Home.

Remember that you have the Purchase Price and a Final Mortgage Amount that includes Repairs.  The Final Mortgage amount is what the House would be worth after all of the Repairs.  The cost of the House and the repairs also cannot exceed the full Market Value of the Property once the repairs are completed.


Mon, 10/24/2011 - 19:48 | 1806429 whstlblwr
whstlblwr's picture

Why walk away from almost new home?

Why did walk away from almost new home in 2009, 2010, 2011? Because can't afford. You give me trashy house I give you $100, borrow for house and repair. Thank you government for helping me into debt. Now if I lose job I have chain around neck that pulls me to grave.

Welcome to the bailout, come get your bailout, here have some more. Obviously Obama not paying attention to mood of people.

Mon, 10/24/2011 - 20:08 | 1806491 Waterfallsparkles
Waterfallsparkles's picture


Also remember that most people that buy a house to live in (Owner Occupied) and are not out to defraud the Government.

They just want a Home to live in.  Why would they pay all of the Closing Costs and other fees to make a few bucks and trash their credit?  They had to have good credit to begin with just to qualify for the House purchase to begin with. 

You have to remember that if you defraud HUD or the Government it is a Federal Crime.  The FBI will really come after you.  You are not To Big To Fail.

Mon, 10/24/2011 - 21:20 | 1806710 Tyler Durden
Tyler Durden's picture

That was quite entertaining. Thanks

Mon, 10/24/2011 - 19:10 | 1806348 Use of Weapons
Use of Weapons's picture

+1 for expertise given freely.

Mon, 10/24/2011 - 19:09 | 1806345 honestann
honestann's picture

Wanna bet there isn't a provision in there somewhere that more-or-less forces all the repairs to be done by unionized scam artists?

Mon, 10/24/2011 - 20:12 | 1806500 nmewn
nmewn's picture

Being a unionized scam artist is a human right!!!

Sorry...I'm just on a roll with the meme ;-)

Mon, 10/24/2011 - 20:37 | 1806567 Lets Eat Grandma
Lets Eat Grandma's picture

Having been through the arduous process myself, there is not a provision for this. That is surprising. The HUD inspector is the fucking lynchpin in this whole deal. Ours wanted us to do so many repairs on the house that he was trying to call "necessary" that it wouldn't finance for what he was requiring us to do. We had to have the whole house painted inside and out, he was requiring we put up a mirror and towel bar in the bathroom, doors on all the closets, etc. These are things we could do on our own, and had indeed planned to do, but he was requiring it be done by the contractor. 

The HUD asshole's goal is supposedly to make sure that the house is in sellable condition if we were to walk away from the deal because HUD will take over the repairs and sell the home at that point. That being said, I have seen some dismal HUD homes in my area. 

They also require you add a contingency fee into the contract in case the contractor's fees exceed the bid cost. Our contractor guaranteed us the prices on the bid, so we knew we'd never use the contingency. They still required we take a 10% contingency. 

Mon, 10/24/2011 - 18:15 | 1806190 Kina
Kina's picture

This sounds like Helicopters to me.

Mon, 10/24/2011 - 19:25 | 1806379 Raging Debate
Raging Debate's picture

fine. lets go out with a bang then. America...}uck Yeah!

Mon, 10/24/2011 - 20:04 | 1806479 donsluck
donsluck's picture


Mon, 10/24/2011 - 18:16 | 1806193 anynonmous
anynonmous's picture

is there a citizenship requirement or is a green card included with the $100

Mon, 10/24/2011 - 20:11 | 1806481 kaiserhoff
kaiserhoff's picture

Citizenship requirement?


Of course.  US Citizens and employed white people are ineligible.  Thanks for asking, now get back to work.  Your masters need more revenue.

Mon, 10/24/2011 - 18:16 | 1806195 Everybodys All ...
Everybodys All American's picture

Mark it down as another democrtic led idea and this time not unlike any of the other lame ideas whose sole purpose is to buy votes will end in further damage to our budget and eventually our AAA rating.

Mon, 10/24/2011 - 18:17 | 1806199 LawsofPhysics
LawsofPhysics's picture

I thought that the repubs controlled CONgress?

Mon, 10/24/2011 - 18:28 | 1806237 UP Forester
UP Forester's picture

You still think congress passes laws, and .gov follows them?

That's SO 20th century....  EARLY 20th century....

Mon, 10/24/2011 - 18:28 | 1806240 Everybodys All ...
Everybodys All American's picture

This has nothing to do with congress or the democratic led senate..

Tue, 10/25/2011 - 15:38 | 1809607 blindside
blindside's picture

Indeed - this is coming straight from our Dictator himself. He has already said 'We Can't Wait' and he will find ways to 'work around' Congress. This is but one of many examples yet to come.

Who cares if this is a really bad idea, or doomed to fail from the start. This is nothing but a campaign action - essentially a way to buy votes for the next election. As long as it doesn't collapse before Nov 2012, future be damned.

Methings there will be a great many easier, faster, and better ways to cash in coming soon.

Mon, 10/24/2011 - 18:16 | 1806196 LawsofPhysics
LawsofPhysics's picture

Fuck, imagine what someone with serious cash could do,  Hhmm....  just imagine.  Get you debt-slave quarters established now, before the rush.

Mon, 10/24/2011 - 19:31 | 1806389 Raging Debate
Raging Debate's picture

I'll invest because low organic growth is fine with me. dont any of you want to create some sales vehicles to raise capital from them? its just a bit harder but more then possible. Prudence has got to have reward sometimes Law.

Mon, 10/24/2011 - 18:17 | 1806197 Waterfallsparkles
Waterfallsparkles's picture

Plus, most of this is only for Owner Occupants.  How many People still have any Credit to buy?

Mon, 10/24/2011 - 20:08 | 1806492 kaiserhoff
kaiserhoff's picture

Credit?  For an FHA loan, when Negrodamus is up for re-election.  For the love of god...

Mon, 10/24/2011 - 18:17 | 1806198 krispkritter
krispkritter's picture

"American Free-dumb".

Hardly anything I grew up with means the same thing anymore. I must have gotten a lot more wasted in high school than I can't remember because I swear I'm not on the same planet anymore...

Mon, 10/24/2011 - 18:17 | 1806200 i love cholas
i love cholas's picture

I hate to be a dick tyler, but the homes in the states you listed are only worth about $200. /sarc

Mon, 10/24/2011 - 18:19 | 1806207 Piranhanoia
Piranhanoia's picture

Mutt Morton went on further to describe his micturations (and the affect on his shoes) when he heard he was going to get to sell homes that really belonged these suckers that had been fleeced by their government to a new crop with government financing, free cheese, and too fucking stupid to realize they were getting the radioactive slice of the American Pie.

selling REO is a crime every party involved understands except the single family buyer that has just wasted their money and will have to sue the bank they bought the steamer from to get satisfaction.  There is no title. It didn't exist to the seller. It is conspiracy to defraud that is encouraged by government, ignored by law enforcement, and the broken can't afford the cost of the legal fight.  All in the design.

Fair is fair Mutt, the 99 are going to be holding trials at some point. You sign up now, ya hear?

Mon, 10/24/2011 - 20:00 | 1806464 scatterbrains
scatterbrains's picture

multi family reits aught to get ass fucked as the sub prime populace pours out of their rentals.

Mon, 10/24/2011 - 18:26 | 1806225 Use of Weapons
Use of Weapons's picture

Detroit is saved!

Mon, 10/24/2011 - 19:20 | 1806368 CPL
CPL's picture've at least seen pictures of the place I hope.

Mon, 10/24/2011 - 19:37 | 1806398 Use of Weapons
Use of Weapons's picture

Lick of paint, couple of courses of pest removal...


There's been some serious moves in places such as Hacker News et al over investent in Detroit. Some real moves into rennovating the centre and getting things going. Realistic appraisal - they're fighting to retain a core, and probably zone off the worst areas as a tourist attraction.



Wait.. trololololol. Nah, they're fucked. But at least there's some people willing to fight for it.

Mon, 10/24/2011 - 18:26 | 1806227 peekcrackers
peekcrackers's picture

holy un-real-estate

Mon, 10/24/2011 - 19:41 | 1806413 MsCreant
MsCreant's picture

The government has become Surrealators.

Mon, 10/24/2011 - 18:29 | 1806229 SwingForce
SwingForce's picture

This is just the start- the trial baboon, to paraphrase, if Obie wants a 2nd term he needs to give the Houses to the People!  Next- halt foreclosure sales and Quick! There's a Hurricane coming to South Florida.

Mon, 10/24/2011 - 21:03 | 1806656 technovelist
technovelist's picture

"trial baboon": ROTFL!

Mon, 10/24/2011 - 18:27 | 1806232 lincolnsteffens
lincolnsteffens's picture

You can't make this stuff up. Perfect scam for those who want a free ride on YOUR TAX MONEY. There is no word to describe the

depths of stupidity the planners of this nonsense. Maybe Chris Dodd is back in DC working on this with Barney.

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