Like our market does not already have enough problems this year, now we have financing issues to watch out for too. I have been hearing over and over for the last few months about all the sub-prime issues, rising foreclosures, and plummeting home values but until yesterday it had not really effected my business. I had a transaction where the buyer was approved for financing with an interest only ARM and scheduled to close tomorrow. The lender now informs us that with all the pressure they are feeling from congress, they have now initiated new guidelines requiring that the buyer must qualify for the fully amortized payment at the end of the interest only ARM period. Now the buyers ratios are too high and he no longer qualifies for financing. After speaking with 4 different lenders, I was informed that all lenders started initiating this policy as of Monday 7/23/07. I am representing the seller in this transaction and needless to say, they are not happy. Prices in our market are such that the majority of buyers obtain interest only products in order to purchase the home they desire at an affordable payment. This new change will certainly have a negative impact on our already tough market and will surely create some headaches for transactions currently under contract with iffy buyers.
Just wanted to alert fellow agents to keep an eye out for this before it comes back to bite you in the ass.
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