Quote:
Originally Posted by Oblivian
This isn't entirely true. Freddie Mac is still giving mortgages with only 5% down. National City and Wells Fargo are still doing mortgages with only 3% down. The Genesis Program (FHA with 3% down paid by seller) just ended on September 30.
From working in the industry, I can tell you the biggest problem isn't the lack of down payment. The lack of down payment required is definitely a problem, but it's the overextending of credit compared to income. Let's say Joe Blow was approved for a zero down 200k loan in which he was foreclosed on. If the banks have the same guidelines with the only difference requiring a 20% down payment, Joe Blow will go out and buy a 250k house with 50k down and still be foreclosed on. If your mortgage payment is more than 25%-33% of NET monthly income, you are running a major risk IMO.
Also, the "tightening up" when it comes to credit scores isn't here yet. We just received an order for someone who declared bankruptcy in 2005 who is getting a purchase money mortgage. We've also recently received orders where the buyers have judgments that will not be paid off at closing and attach to the property once the deed is recorded. It's flat out ridiculous.
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Most of his post (Nietzsche) was indeed accurate. To be very honest, I’m astonished that you have prospects with 3 year old bankruptcies and unpaid judgments receiving financing. You specifically mentioned Nat City & Wells as lenders you work with. I’ve done TONS of business, with both, for many years and have outstanding relationships with my reps there. There is no way on god’s green earth that they would approve the types of loans you have described here. For that matter, I don’t know a single bank in America that would approve those loans.
Who are you getting the approvals from? More than anything, I could use that information to process some files. I genuinely hope you’re not BS’ing…