This just in today from my SPAM folder. :) I have included only a portion of the email to give you the gist of things, but this lender and I definitely don't see eye-to-eye on lending practices!!
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Hi Sonja,
My name is ________and I am a branch manager for _________. The reason I am emailing you is because I noticed that you have a listing that is in a USDA RD area. I'm not sure if you are familiar with USDA loans, but they are about the last remaining 100% financing loan out there anymore. I have been doing tons of them lately and I am trying to find agents that have listings in USDA approved areas to work with.
The way real estate and mortgages have changed over the last year or so, we need to find ways to give ourselves a competitive advantage over everyone else in order for us to get through this difficult time in our industry. This loan hands down will separate us from most of the competition. The biggest problem I come across is that the buyer is qualified credit and income wise, but can't come up with the 3.5% down to do an FHA loan. This loan takes that problem totally out of the equation. It is the most under utilized loan out there. Once you can show them that it is possible to get a home with no money out of pocket, on top of the $8K 1st time buyer tax credit, you have a really motivated buyer.
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My philosophy is IF a buyer does not have cash to put 3.5% down on a home, they should NOT be purchasing a home!! Actually, I believe if a person doesn't have 10-15% down, they should not be purchasing a home.
Why? Many reasons.
First, absolutely everyone should have a savings account. In the real world, accidents happen, people lose jobs, cars break down and need repairs. There are unplanned expenses that crop up, and everyone needs a savings account to cover those unexpected expenses. It just makes sense! How much is enough?? I would suggest having enough savings to cover necessary living expenses for 5-6 months. Notice I highlighted NECESSARY. Expenses like your mortgage, groceries, utilities, car and gas.
Second, we need to turn the tide on the number of foreclosures! Look around your neighborhood. Every neighborhood I know of...EVERY NEIGHBORHOOD within a 20 mile radius of our home...has had foreclosures this past year. Some of these homes are in the high-end market and were bought by people living paycheck to paycheck. When the paycheck stopped coming due to a layoff, then the mortgage company did not get paid. I have had two clients who I am sorry to say have literally walked away from their properties, and they didn't care!! Why? Because they had VERY little money invested in those properties. When they couldn't (or wouldn't) make the payments, it was "no big deal" for them.
Third, those with savings will be MORE likely to maintain their property!! If someone who has no money to put down on a home has an unexpected event (for example, last year we had Hurricane Ike) and needs to make repairs...will they?? Well, from the cases I have seen...the answer is "no". My former neighbors have complained that the couple that bought our home 3 years ago have yet to replace the shingles that came off the roof from hurricane Ike back in September 2008. With zero down and two mortgages, they "qualified" to buy the home...but can they afford to pay the deductible needed to make the roof repairs?? I'm sure the HOA has sent them a few letters!!
In conclusion, if you are a lender or real estate professional, PLEASE don't talk your clients into buying a home without a sufficient downpayment. The biggest losers are ALL OF US...those of us who are trying to maintain our homes, make our monthly payments, etc. while our property values are lowered by all of the foreclosures going on around us. AND...those who are being forced to leave their beautiful surroundings as a result of being told "YOU CAN DO THIS"...when in reality...they cannot. Yes, we as real estate "professionals" might close more deals by lending/selling to more people...but our short-term gain may end up being a long-term loss!!
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