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Problems with Subprime Lending

The news has been filled with problems in subprime lending and subprime lenders closing their doors. This affects far more than low income homes. This week we had an offer on a $700,000 property and in the day we were waiting for the preapproval letter the mortgage broker received calls from two of his lenders that they were no longer doing 100% financing. Fortunately, we had yet signed a contract. Over the last year we’ve seen many 100% loans, often asking for seller financing of closing costs as well. Even if you have the preapproval letter, be alert to potential problems. I’ve heard of lenders that have even sent out the closing papers to the title company, and then closed their doors, which means No Funding. It pays to consider the type of loan when considering an offer from a buyer.

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