If you are selling a home to a buyer who has less than 10% down – beware. The salad days of 100% financing on stated income and no documentation are gone. As world of mortgage-backed securities evolves, lenders are under increasing pressure to tighten loan requirements and home buyers and sellers are feeling the pain.
The majority of conforming loans (buyers with strong credit, sufficient income, decent down payment, borrowing under 417,000) are bought by Freddie Mac and Fannie Mae. However, non-conforming loans that are traded in the private secondary market are making headlines on a daily basis. With hedge funds that deal in mortgage-backed securities going out of business, the pool of funding for non-conforming loans is drying up.
What does this mean to a seller? Interest rates are higher and fewer buyers can qualify for financing under tighter standards. If your buyer plans to finance more than 90%, your Realtor should be on the phone with the end-lender frequently. The mortgage blog Implode-O-Meter has a list of bankrupt and struggling mortgage companies since January 1 that includes these lenders below (many of whom operate in Tampa). If your buyer has a pre-approval from one of these, contact your Realtor immediately.
