Roller Coasters have a lot in common with todays houseing market when it comes to financing. The ride can be smooth and fast or it can be hair raising causing people to scream and lose their breath.
Today the financing issues that sellers face are much different than a few years ago. In advertently in trying to correct a loose credit system the checks and ballances have tiped the scales the extreme. It is now the borrower that is under the spotlight. The lender certifications and predatory practices where not considered the leading problem for the collapse of the housing market.
I represent buyers that have the right credit score. They have the expected amount down...they even have residential status without question. They have been approved by a reputable lender (conservative too). The property appraised and met the financial requirements of value. The lenders underwriting department wouldn't accept that appraisal value. They didn't like the comparisons used by a certified appraiser they hired!
Bottom line the bank wouldn't fund the loan. We discussed the property, the comps and the appraisal requirements. The wrinkle here is the home is 50 years newer than any home in the area. The lot was split and a home constructed inside the city. Thus finding comparables the same age is like finding chicken teeth.
So we exited lender #1 and moved to a less conservative lender who reviewed the appraisal and accepted the appraisal as written. In the mean time the buyers were worried they would miss out on the first time buyer program. They did...and lender #1 used pressure to put more down (40% instead of 30%) not because of the buyers credit but because of the property appraisal. If they did increase the down they could still qualify for their first time buyer credit. Interestly the buyers looked at this manuver as extorsion. Pushing the buyers to the edge of their time limit and then switching loans. The buyers said NO!
We start looking at other properties. Mean while I kept sending emails to the lender. The properties were foreclosures. Now we have two from the same lender side-by-side. We want them both! We rewrite our offer using an addendum and lower the price on the unit that didn't appraise. Now it falls within the guidelines of the lender.
The lender took a $10,000.00 additional loss because of their internal underwriting and never seemed to acknowledge the issue was within the bank itself?
Seems like we live in a roller coaster world of selling homes and helping buyers and sellers meet their goals.
Have you had any roller coaster rides?
Happy Buying and Selling!