As brokers out in the market prior to the sub prime derailment that is everywhere in the news now, it did not come as a surprise. As a broker...we had many situations where we list a home, find a buyer who is in the process of local financing but not completely thru....and then find out from banker, oooohhhh we have problems...can not make loan. Buyer goes to other local banks that have same banking guidelines for the most part and not a lot of giant risk takers on the lending level in conservative Northern Maine. So what happens...Deal dead until credit improves right? Wrong. Buyer gets on line and find a zillion banking options...finds outlet that will finance easy as pie for higher rate. And yes, they tell buyer..."You're gonna love this variable rate!" As a broker, you had to wonder how could buyer get financing when no one else in Maine would touch them with a ten foot pole. The buyer would spell out their credit woes and in the past you worked with them with local lender who guides them back to credit health to get a loan...it could take a year or more. These were borrowers who you knew they were not just a little iffy but that any local banker says no one will be able to underwrite this one with the federal guidelines we have to work with. But voila...loan made. But the same credit woes that plagued them before purchase have caused three of these kinda loan situations locally that I saw go to closing last year become empty foreclosures needing alot of clean up this year. One in Smyrna Maine I am amazed at how much damage in so short a period was done on the home. And it was left like a pig hovel to boot. But these" hit the fan" homes loans that were made by lenders no longer in business last year represent a new crop of homes to consider..many are "dirty but nice". So when you hear market is down, etc...remember there are deals out there and repo companies that say move 'em out quickly. These sellers are way more flexible on offers than the average Joe Home Owner who says I have to have this amount or I can not move..period. A home we sold last year in the $80's is suddenly in the $40's partly due to condition for short time buyer was in the place but also due to liquidation attitude of holding company that says dump it before winter...Watch for a large crop of these as the autumn leaves start to fall. Get out your check book and keep your credit clean..like the last savings and loan crisis, banks will suddenly have new legislation / regulations requiring tighter money constraints due to looseness of the sub prime frenzy!
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