A Few Tidbits About thie Current Real Estate Market
May 5, 2010
Even the experienced real estate agents who have sold property in other down markets are learning how to work in this market. Along with their buyers and sellers, they are having to learn how to work with lenders and their investors. It seems that a bank's asset managers are also on a learning curve.
Having experienced the Resolution Trust Company of the 1990s that was established to dispose of foreclosed properties, it has been a tad hard to understand why it seems to have taken a very long time for banks to develop a system for dealing with their foreclosed properties and with short sales.
Having said that, once a bank approves a purchase agreement, the borrower will probably encounter the "NEW RULES" for obtaining financing. First and perhaps foremost, if you are a purchaser and are obtaining a loan, absolutely do not get so excited about your potential new home that you go out and purchase furniture, appliances or make any large purchase until your transaction has recorded. It is standard practice for lenders to check borrower's credit scores just before the loan is approved for funding. Any major new charges could affect your credit score (FICO) and, oops, the lender will not fund.
Another practice that we have recently encountered involves buying a home prior to selling your present residence. Lenders are wary of fraudulent buyers. Those are the buyers who are really buying investment property, but apply for a loan as an owner occupant. Even with wonderful FICO scores and more than a minimum down payment a lender might insist that the buyer take a non-owner occupant loan which will have additional fees. And this surprise may only occur late in an escrow.
As for the wood destroying pest addendum requiring a pest control inspection and for the recommended work to be completed prior to close of escrow, be aware that lenders are beginning to require that the Section 2 items be also completed. These are the conditions that might lead to an infestation, but are not yet one; earth to wood contact is one.
After the financial crisis of the past year and a half, lenders are super cautious plus their ability to sell their loans on the secondary market has been seriously impacted.
Find out from your mortgage rep as much as you can about how the "NEW RULES" might affect your transaction, but remember, they are also learning.
Even the experienced real estate agents who have sold property in other down markets are learning how to work in this market. Along with their buyers and sellers, they are having to learn how to work with lenders and their investors. It seems that a bank's asset managers are also on a learning curve.
Having experienced the Resolution Trust Company of the 1990s that was established to dispose of foreclosed properties, it has been a tad hard to understand why it seems to have taken a very long time for banks to develop a system for dealing with their foreclosed properties and with short sales.
Having said that, once a bank approves a purchase agreement, the borrower will probably encounter the "NEW RULES" for obtaining financing. First and perhaps foremost, if you are a purchaser and are obtaining a loan, absolutely do not get so excited about your potential new home that you go out and purchase furniture, appliances or make any large purchase until your transaction has recorded. It is standard practice for lenders to check borrower's credit scores just before the loan is approved for funding. Any major new charges could affect your credit score (FICO) and, oops, the lender will not fund.
Another practice that we have recently encountered involves buying a home prior to selling your present residence. Lenders are wary of fraudulent buyers. Those are the buyers who are really buying investment property, but apply for a loan as an owner occupant. Even with wonderful FICO scores and more than a minimum down payment a lender might insist that the buyer take a non-owner occupant loan which will have additional fees. And this surprise may only occur late in an escrow.
As for the wood destroying pest addendum requiring a pest control inspection and for the recommended work to be completed prior to close of escrow, be aware that lenders are beginning to require that the Section 2 items be also completed. These are the conditions that might lead to an infestation, but are not yet one; earth to wood contact is one.
After the financial crisis of the past year and a half, lenders are super cautious plus their ability to sell their loans on the secondary market has been seriously impacted.
Find out from your mortgage rep as much as you can about how the "NEW RULES" might affect your transaction, but remember, they are also learning.
posted by shirley harry at 9:52 AM
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