Reducing how much a seller can contribute to a buyers closing costs...what does that have to do with the government?
I had some thoughts and maybe somebody can figure this out for me. Let's see...none of the money that isn't going to be allowed for buyer expenses goes to the government.
So why regulate something that doesn't improve your cash flow position? Remember Fannie Mae lost some
little number like 37 million dollars...they will be the next one for a bailout!
Regulating the contribution can reduce the number of buyers, because the buyer will have to come up with more money or take out a larger loan.
Maybe that's the secret...the lender makes more money because the additional expenses can be rolled into the loan? So those millions of dollars that have come out of the buyer profits now go to the lender.
Surely this reduction in the seller contribution won't increase the sellers bottom line...the buyer will have less so the buyer will want to pay less.
This leads to another wrinkle...less sell price, less commission...less earnings not by much but look at the number on a national basis! All of a sudden a few hundred dollars becomes millions! C
Can you figure this one out...who is the winner other than the lender? The government doesn't get any of the reduced contribution, anyway that's the way it seems on the surface. The seller won't make more in the sale price and the buyer has either a higher mortgage or increased costs or both. That only leaves the lender in my view.
Any thoughts?
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