It was announced that FHA and Fannie Mae are lifting restrictions for individuals who want to flip houses. Flipping houses is the process of taking foreclosures, fixing them up and then selling them to make a quick profit. The biggest downside to flipping houses is getting the financing. Until yesterday, it was tough. Now, house flippers can get financing pretty easy.

In addition, Fannie Mae is giving a 3.5% incentive to those who buy properties from their HomePath properties, that is, foreclosures Fannie now owns.

So think about it for a minute – Let’s say that you have never bought a house before, making you a first time home buyer. First time home buyers get an $8,000 tax credit, 3.5% up-front to deal with closing costs (if they purchase a Fannie Mae foreclosure), the ability to buy a home with a low credit score, and the ability to purchase a home with little down.

Isn’t that what created the foreclosure mess to begin with? Apparently, they haven’t learned from the first and ongoing crisis.

Basically, it is the government encouraging people to be real estate speculators. How about encouraging home ownership instead? How about putting affordable mortgage programs together on these foreclosed homes instead of luring people into real estate investing? What about encouraging home ownership for those who never thought it possible and solving this enormous supply of foreclosures?

Looking into the future, it is my guess that Fannie Mae or FHA will do whatever it takes to unload these properties –that could include financing them for people who really can’t afford them in the first place.

Sounds like another government induced mess.

Tags: Bob Brooks, Fannie Mae, FHA, first time home buyer, Foreclosure, HomePath, real estate