What goes on in Washington about real estate that no one tells you about?  If you are buying and selling property for residential real estate investment in America, then I recommend you read this.

For those of you who may not be aware that, in 2010, the Obama administration made it near impossible for any real estate investor to access, buy and resell residential property.

In short, the government has been doing all they can since President Obama took office to confiscate wealth through real estate; and make real estate investment impossible for the general public.

Freddie Mac and Fannie Mae actually spent much time and resource (they have a $15M/year marketing budget) to approach the FBI and accuse real estate investors who buy distressed residential property as committing mortgage fraud; all falsified lies.

It had gotten so bad between 2009-2010 that a group of small business owners…using their own money to engage a professional Washington lobbyist…attempted to do what no one in the residential real estate investment community thought could be done.

No one thought it could be done because the lobbyist had a “shoestring” budget (non-tax payer) to work on with regards to this small group of investors; versus the mountain of a budget at Fannie/Freddie’s disposal.

And if you think this doesn’t apply to every American citizen, then think again.

Real estate investment (aka buy, selling, rehabbing, flipping) from the day President Obama took office took a turn for the worse (candidly, has cost my real estate company many tens of thousands of dollars in added expenses).

Major markets across the country are still showing negative appreciation values year after year; while the fact remains Freddie, Fannie and the Government are insolvent with debt that can never be repaid.

What did “we the people” get back thanks to the distressed property coalition?  Not everything; but it’s a great start.  Here are a couple of examples that start on November 1st 2012.

1) 30 DAY RESALE RESTRICTION:  if you buy a distressed residential property (a short sale for example), you cannot resell that property until the 31st day.  It should be zero days.  In other words, you should be able to sell a property any time after you buy it; not when the government tells you it’s okay to sell it.

The lobby effort was able to get the resale restriction down to 30 days for now.  And so you know, the Obama administration created a 90-day resale restriction out of thin air a few years ago (and in some cases imposed more than 90 days).

2) 31-90 DAY PROFIT RESTRICTION:  if you buy a distressed property (a short sale for example) and you resell it for any reason in the 31st-90th day, then you can only sell it for up to a 20% spread. (eg. buy for $100K — Sell for $120K).

In other words, if your “mark-up” is 20% or less, you can sell between days 31-90.

Candidly, this becomes a huge problem for any real estate investment where the general contractor completes the work in a shorter time frame; and oftentimes construction costs are over 20%.

Somehow, the government feels that construction costs are not part of the initial costs of the real estate investment (although we are trying to get a waiver to have that changed).

If you think this all sounds absurd, just imagine how hard it has been the last 3 years to navigate residential property for real estate investment.  Imagine that you buy a property and your rehab/renovation team completes renovations FASTER and BETTER than others and you are ready to resell the property in 61 days…

No can do; the Profit Restriction will not add your construction costs to your original purchase price (unless you can file for a waiver that allows it on that deal).  Therefore, you will have to wait until the 91st day to sell.

You can imagine for a real estate investment group and general contractor that buys distressed property for fix-up and sale…and who do this for a living…how this could add holding times to property that could lead to big cash flow problems for their business.  Especially, if they are using a line of credit to conduct operations.

Indeed, this and worse has been happening since 2009.  Would it have gotten worse if the Distressed Property Coalition did not start their 2 year-long effort in 2010?  You can bet your bottom dollar it would have.

President Obama was seeking to appoint a new “head” of FHFA (to replace Ed Demarco).  President Obama was seeking to appoint a banking commissioner from North Carolina who is anti-investor.

Meanwhile, Ed Demarco is not necessarily interested in remaining with the FHFA; but the Senate has been keeping him there.  Why?

…Because FHFA head Ed Demarco has blocked the Principal Reduction Program.

In other words, big government politicians are seeking the implementation of government controlled principal reduction programs and the use of eminent domain to change mortgage terms.  Obviously, to benefit the Freddie and Fannie bailout.

Notwithstanding the fact that all these government programs have failed and that a notable real estate correction has not occurred despite near zero percent Fed interest rates and other manipulative tactics.

A small group of private investors in the Distressed Property Coalition have provided Washington real world data on thousands of actual day to day real estate transactions.  And reveal why real estate investment in the private sector is the best and least expensive way to correct the housing crisis…

NOTE:  this real estate investment information is straight from the new program briefing that the attorneys, FHFA and the lobby effort created and is going into effect November 1st, 2012.  In other words, I am providing you information that only a few groups, as of this writing, have access to.

It took those efforts 2 years and over 100 meetings on Capitol Hill.  And there is still a long way to go to redeem your real estate freedom.  Thankfully, the FHFA started taking note.

No one had ever presented this level of detail to the FHFA before DPC finally did.  All the FHFA ever considered was what they were told by Freddie and Fannie.  Ironically, Freddie and Fannie are failed and insolvent institutions (as is the government).

Ed Demarco is going against Freddie, Fannie and President Obama on these new government programs; and rightfully so.

There are many more standard points of agreement the coalition was able to contribute.  For instance, how cases can better be handled where a soldier’s spouse is selling property for less than the amount owed on the mortgage (aka short sale) during a military relocation.

It may be important to remember that when a government issues programs, products or incentives of any sort, that it does so for the benefit of making money for them; at the expense of the many.

The same holds true when the government attempts to force a principal reduction program down your throat; while simultaneously conjuring up new laws to prohibit the general public from real estate investment.

Obama FHFA Wealth Stealing Real Estate Program

By the way, these new regulations don’t apply to government sanctioned businesses buying HUD homes.  In other words, entities buying HUD homes are free to buy and resell property without the new resale restrictions.  Conveniently, the Obama administration has purposely created real estate regulation that favors the government.

The end result is exactly what we have been experiencing.  A real estate recovery nightmare.  The act of real estate investing veered from being a common sense process, to some overcomplicated maze starting in 2009.  Thanks to the Obama administration.

You can check out the Distressed Property Coalition (DPC) on their website as well.

In a nutshell, if you are planning residential real estate investment, make sure you know the rules of the game.  If not, work with a real estate investment company that does…Peace!