Since the new guidelines appear from Freddy Mac and Fanny May, there are quite some deals falling through.
For instance, my buyer who was in contract on a condo, suddenly wasn’t able to get a mortgage because the building in which the condo he was buying, didn’t have 70% units sold. No matter there have been sales made last year, most owners have a mortgage, his apartment was appraised for more then the asking price and instead of 10% down, the minimum requirement, he put 30% down.
Nope, he was denied. To make the story a bit more complicated, the unit was stripped from its kitchen, bath and electric wiring because the sponsor’s original plan was to sell the unit renovated for a higher price. When the apartment sat on the market for over 8 months and no offers or interest came in, he decided to slash the price in half and sell it “as is”. Buyer came along after another 6 months, liked it and started the process. No way he would be able to obtain a mortgage without it being livable and so sponsor, who wanted to make the deal, offered him the key of the apartment with a special provision in the contract, allowing him to start renovating in order to obtain mortgage. Buyer agreed, signed the contract and put 10% at seller’s attorney in escrow. Seller’s attorney went on vacation and the signed contract did not return to buyers attorney for another two weeks, time that buyer could not use to start his renovations.
Meanwhile, with the new guidelines, no bank wanted to finance and attorney asked for a bit more time. Not only it was denied, a series of threatening calls and ultimatums were made and now, two weeks after the contract expired, a mortgage in place, keys of the, now finished apartment were changed and buyer is bullied into an immediate decision of paying $20K more, otherwise lose his apartment. He put in over $40 K in neccesary renovations.
Changing market, but no change in greedy people who don’t care to hurt buyers who became a victim of these new guidelines.
Very very very interesting,i will definitely have to bookmark this page….just such great stuff you bring up…there is always more to learn.