I have a few SS deals going right now, and
I’m hearing more and more that it’s become very difficult to close SS deals because
- people aren’t buying right now
- people aren’t qualifying for a loan now
What are you guys out there experiencing?
The current situation that has been dubbed the “Mortgage Meltdown” by the main stream media is causing problems of all sorts. My wifes mortgage company has had more than 3/4 of their deals die because they were placed with one of the more than 150 bank that have closed their doors over the past few months.
Because most of the sub prime lenders have closed down the ones who are left have pushed their underwriting requirements to unreasonable levels. One buyer I know of has a 620 credit score, a stable job, a decent debt to income ratio and the lender still rejected the loan just last week. They said it was because they now require a minimum credit score of 640. 8, even 4 months ago this deal would have closed and nobody would have thought twice about it.
The record high numbers of loan fraud that contributed to the current “crisis” has scared lenders into such a defensive position that they are verifying everything they can about the potential buyer. If anything looks out of place or seems fishy they will kill the deal. There is so much pressure on underwriters these days they would rather not do a loan at all than to do a potential bad loan that could end up in foreclosure. This combined with the new more sticked lending requirements is eliminating the any possibility for the majority of those who want to buy a home.
Even the Commercial industry is feeling a hit from this. It has become increasingly difficult for me to fund projects under $5m. Right now people are just to afraid to invest in what could possibly be a bad deal, so they are going much slower and taking more than enough time to review each case. But out of sight out of mind is the American way of life. Give it a little bit of time and the lenders will see less bad loans (because of their lack of writing and over all lower number of loans written) and they will begin to slack again. Everything in life seems to go in cycles doesn’t it?