Minnesota First Time Home Buyer Real Estate Blog

Expiration of Federal Housing Administration's Property Flipping Waiver

The real estate market will be changing in the coming months -- a decision from the Department of Housing and Urban Development will not extend their waiver beyond 12/31/2014, a decision that will limit investor/rehab contractors from buying distressed properties, fixing them up and selling them to a buyer within 180 days. So for all you HGTV fanatics out there who love those rehab shows, this practice might become more and more rare with new restrictions.

Most of the rehab projects exceed the "sell for more than 100% of the recent purchase price" portion of the rule, which means an investor would need to hold the property for at least 180 days before being able to sell it to a buyer using an FHA mortgage. Many first time home buyers use FHA mortgages and many of these flipped properties are in the price range of first time home buyers. 

A quick restore on a distressed property and flip is how these investors make money and revitalize previously lost pieces of real estate. The Federal Housing Administration is prohibiting this practice because it eliminates the most egregious examples of predatory flips within the FHA mortgage insurance programs. These investor/rehab contractors still have the option to sell the property under 180 days, however, the property is then not eligible security for a mortgage insured by the FHA (there are exceptions in the fine print). 

How this will affect the market in total will be determined in the coming months and years -- this certainly will mean a change in how house flipping is practiced. 

Image via: REMAX 


Minnesota Paid $40 Million to Federal Government in 2013

In 2013, the state of Minnesota's businesses and citizens paid $85.9 billion in federal taxes, but only got $45 billion back in federal grants, contracts, salaries, benefits and other compensation. This $40 billion divide is among the highest in the country according to the National Priorities Project.

“Minnesota is younger, healthier and wealthier” than the vast majority of the nation, said Dartmouth government professor Dean Lacy, who studies the relationship between states’ federal contributions and benefits.

Minnesotans paid an average of $15,847 per person in inflation-adjusted federal taxes last year — twice the U.S. average. The state also ranks in the bottom third of states in per person receipts for federal programs like food stamps, Medicare, education benefits and unemployment benefits. Keep in mind, these are federal program statistics. 

These numbers point to the fact that Minnesota has been working tirelessly to use its own state funds to take care of the problems within the state's borders. 

“We tend to take care of our problems before the federal government has to,” said Jay Kiedrowski, an expert in leadership at the University of Minnesota’s Humphrey School of Public Affairs. “That’s why this is a tricky problem. It’s really a hard dilemma. … In a sense, we’re being penalized for being efficient.”

Minnesota is a state with high-income citizens and low poverty and those states tend to pay in more in the U.S. If the state had more poverty, it would collect more...