Have we learned anything?

Real Estate Broker/Owner with Barry Bridges Weichert Realtors Bridges & Co.

Early this morning I received an e-mail from a local lender telling me they are still doing 100% financing. Bring them the deals. no problem.

Later in the day I go into my office and there is a flier for a company soliciting 103% financing. The 3% is to cover closing cost. You need a 620 score. So that gives you a person with a 620 and no money for closing costs and that is a good deal for the client and the public?

How did we get into the mess we are in? Am I missing something here? Am I wrong to advise clients to save some money and start out with a little equity? Am I nuts to think that I need to try and keep my client out of trouble? If so then I am nuts.

Am I wrong here?

Comments (7)

Barbara S. Duncan
RE/MAX Advantage - Searcy, AR
GRI, e-PRO, Executive Broker, Searcy AR

Sounds like your lender is doing USDA Rural Development which is 100% financing.

Oct 21, 2008 08:56 AM
Barry Bridges
Barry Bridges Weichert Realtors Bridges & Co. - Smith Mountain Lake, VA
Lake professional

I don't know what it is but it is 103% CLTV  "use the extra for closing costs and pre-paids".

Am I off base here?

Oct 21, 2008 09:05 AM
Barbara S. Duncan
RE/MAX Advantage - Searcy, AR
GRI, e-PRO, Executive Broker, Searcy AR

I don't know what the CLTV means.  With the USDA Rural Development if the house appraises for enough, the closing costs are added on.  Example.  I had a house that we'd tried to sell for $48000 with no takers.  There was an offer for $40000 with no buyer incentives added in the offer.  The house appraised for enough to add several thousand for closing costs and prepaids.  So even though the sales price was $40,000 they probably borrowed $45000 or so.


Oct 21, 2008 10:09 AM
Jim Frimmer
HomeSmart Realty West - San Diego, CA
Realtor & CDPE, Mission Valley specialist

There also seem to be a lot of private money coming in from foreign investors. I haven't experienced it but I've heard talk around town that some of the private money that used to be used for seconds is now available for firsts because the price of real estate has fallen so far. I think there are a lot of foreign investors who

  • realize that American real estate is valuable and always will be
  • want to own part of the "American dream"
  • have the money to not only buy something for themselves but money to help other people buy and make some money there. And if the other people default, that just means that they own some more valuable American real estate. No problem.
Oct 24, 2008 06:15 AM
Bridget Cella
Re/Max Connection - Sewell, NJ
e-Pro, Realtor

I don't think the extr 3& can be over and above what the appraised value is - the buyer would have to be buying it at least 3% under market value and the seller has to sign documentation to the fact that they are giving the 3% back as a sellers assist - there is a fee of approx $700 to $800 for it but that can be wrapped up into the closing costs etc. 

Oct 26, 2008 02:53 PM
AMBER NOBLE GARLAND - Top Real Estate Expert, Property Tax Appeal Specialist & Author
Strategic Marketing Expert & Relocation Specialist Serving New Jersey and nationwide! - Marlboro, NJ
- The Agent You Can Trust To Deliver REAL Results!

Some lenders are plain ole' greedy and haven't learned from the mistakes of the past. They won't be around long...trust me!

Dec 02, 2008 06:05 AM
Gabrielle Kamahele Rhind
KGC Properties LLC, Tucson Property Management & Real Estate - Tucson, AZ

HI BARRY!  It's like the parents who keeping giving brand new cars to their kids who wreck them time and time again. The more people get bailed out - the more they don't learn.  It's not wrong to keep giving good advice to your clients. -- Gabrielle

Mar 06, 2009 05:56 AM