You have a property under contract, the buyer is preapproved, and the lender says, "Your buyer no longer qualifies for this loan." What do you do?
There has been a quantum shift in the mortgage market. A new credit crunch is making it more difficult even for even "A+" borrowers to obtain loan approval. The days of lax underwriting are gone. For the first time in many years, agents are hearing "no" even when their buyers may be highly qualified. The issue is how to avoid being turned down in the first place, and secondly, if the lender does turn down your qualified borrower, what you can do to keep the transaction together.
"A 'credit crunch' is a lender strike, and a bad one is a common initiator of recession: not just raising rates for risky deals, but choking off credit altogether." Barnes reported in an earlier column that the regulators at Freddie Mac and Fannie Mae are tightening standards on "A" borrowers. Barnes' comment about a credit crunch seems to accurately portray what many borrowers are encountering all over the country. Buyers who would normally have no trouble closing are being subjected to a completely new set of underwriting standards in order to close what would normally be straightforward transactions. Based upon previous markets where prices were declining and foreclosures were increasing, here are some of the common challenges that you may encounter: Please stay tuned for more details. Thank you!
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