Posted by Ed Copp (OH) on January 11, 2004 at 14:25:07:
is the only way out. Bad financing is a definate fire hazard… YOUR TAX DOLLARS AT WORK.
USDA RD loan - Posted by Tom
Posted by Tom on January 10, 2004 at 16:56:14:
Talking with a guy who wants out. He has a USDA Rural Development loan and I don’t know much about them. The loan is about $99,000, he says 1% interest with payment at $486. Can one get away with putting the property in a trust? What does RD do if he leases the house to me, etc.
Thanks, Tom
No can do - Posted by B.L.Renfrow
Posted by B.L.Renfrow on January 10, 2004 at 20:06:02:
Won’t work. If the seller sells before the loan is repaid, the subsidized amount will have to be paid back. USDA can and does inspect regularly to be sure the buyer is occupying the property.
Brian (NY)
USDA RD loan - Posted by Bill H
Posted by Bill H on January 10, 2004 at 17:48:46:
Tom:
My advice. DO NOT MESS with the USDA loan. They are very “owner specific” with reduced interest, low payments, etc. Made to get people onto and into farms who would not otherwise qualify.
If you try to take it over they will call it. The low or forgiven interest will be called due and payable and your “good” deal will go sour in minutes.
Been there…done that…do not bother with this loan.
If he is in foreclosure go to the USDA site http://www.resales.usda.gov/ and look areound and you will find it there.
good luck,
bill H
Re: No can do - Posted by Ed Copp (OH)
Posted by Ed Copp (OH) on January 11, 2004 at 10:20:29:
USDA also highly inflates the value of the property for properties in areas where the income level is low. The end result is a house that might sell for $60K in my town gets a “grant” from USDA going in, and is financed for $90K which may include a grant of $35K for the “poor” buyer. The buyer signs that he will stay at least 20 years, or repay the grant (which is fake money, and never was). Then he gets 101% financing at a reduced interest rate of 1 to 3% depending on his income. If he moves sooner than 20 years he gets to pay back the interest adjustment, too.
Now this is flat out socialism. It is taking tax money to inflate values (and I use that term loosly) in poor areas. There is a problem with this that is that the $90K house is really only worth $60K in money (tops), and it is now used in the local marketplace as a comp. So rightfully so the owner of just any old junker thinks his house has gone up 50% in value. Not so. Unless of course we can figure out a way to live on government vouchers.
Want a nightmare, just buy one of the USDA properties “sub-2” It will teach you more than any seminar on the market.
One more interesting point is that when the USDA house is repossed and comes back on the market, or more correctly while the government is thinking about repo (about 18-30 months), they will talk to you about a short sale. 60 cents on the dollar is the common starting place. This requires “new money” , and incidentally is just about what the property is really worth excluding the government grants. So they will entertain your “short” proposal for all cash, retail price.
Hot deal, YOUR TAX DOLLARS AT WORK.
Re: No can do - Posted by B.L.Renfrow
Posted by B.L.Renfrow on January 11, 2004 at 11:39:31:
The last one of these I got a call on, I laid out the (dismal) scenario for the owner and told them I couldn’t help. A couple months later, the place burns to the ground in the middle of the night. Not saying there’s a connection, but it wouldn’t surprise me if there was.
Brian (NY)
Re: No can do - Posted by E.Eka
Posted by E.Eka on January 12, 2004 at 13:43:44:
Sounds like an episode of the Sopranos! HA HA HA!