The mortgage crisis is still a nightmare. As a real estate agent for 29 years I try not to have surprises for my customers but, it seems that this market keeps them coming. My client was putting down $90,000 on a $134,000 home. Wouldn’t anyone think that was a slam dunk? Wrong: Turned down because the house to be purchased was a flip only purchased 93 days before contract.
Yes it appraised. The seller is an investor who had purchased it on the court house steps, fixed it up and put it back on the market for market price. But, because it was a “flip”, the new underwriting rules were not to approve any “flip”. They consider a flip if owned for less than 6 months (Not FHA guidelines).
The bank had no risk with that huge down payment but because of the “rule” they couldn’t sell the loan. Therefore, the buyer was turned down the day before closing Dec. 30th. We scrambled and the buyer came up with cash to close on the 31st.