Protecting the people or too much government involvement?

Big brother's knocking at your door and they're not looking to buy.

The Department of Housing and Urban Development is taking a major step toward preventing an abusive lending practice known as flipping that has left thousands of unsuspecting home buyers on the hook for properties worth far less than what they owe on them.
Effective June 2, the Federal Housing Administration will no longer insure mortgages on properties that have been sold more than once in 90 days. And if a repeat sale occurs between 91 and 180 days, lenders will be required to obtain an additional and independent appraisal.
The new rules are designed to stop "flipping," a maneuver in which speculators buy a rundown property, often at foreclosure, make a few cosmetic repairs, and sell them, sometimes within days, at artificially inflated prices.

Sometimes the houses are sold to fictitious buyers and then resold again and again at ever higher prices until they carry mortgages that far greater than their actual worth.
Then, when the monthly payments stop, if they have been made at all, lenders take over the properties and file claims with the FHA, which guarantees to make lenders whole if borrowers fail to meet their obligations....

There are some exceptions to the new anti-flipping rules. FHA-insured mortgages will still be available on houses taken back by HUD and then resold as well as on properties purchased by an employer or relocation company.

Otherwise, resales occurring 90 days or less following acquisition will not be eligible for an FHA-insured loan. Repeat sales executed within three months "imply pre-arranged transactions that often prove to be among the most egregious examples of predatory lending practices," HUD said. For resales between 91 and 180 days, HUD will require lenders to provide additional documentation of value if the new purchase price exceeds the old price by more than 50 percent.

In addition to these time restrictions, HUD said buyers will be eligible for FHA-insured mortgages only when they purchase their houses from the owner of record...