This Mortgage Mess

Real estate goes in cycles. Up some years; down others. Right now, our 'up' balloon is down.

And, how does this affect you? Here are some situations:

1) Buyer. If you're presently going to purchase a property, you'll find it harder to get a mortgage. Lenders are asking for more documentation. This is understandable. Just do some 'due diligence' and make sure that your lender has money. American Home Mortgage in New York was unable to fund millions of loans this week. They're going under along with other lenders.

2) Seller. Ask your agent to do some research on your buyer's lender. And, if the lender is not familiar, be very, very, careful. Nothing worse than thinking you've sold your property and there's no closing.

3) Recent buyer. If you purchased a property within the past two years, you may need help. Especially if you bought using an 80% first and 20% second. Now, those rates may start adjusting upward and you're going to be paying lots more. And, be careful. Some loans have a pre-payment penalty. And, some lenders are playing "hard ball" as they don't understand that it's better to receive monthly payments than a property 'in lieu of.'

If you're having problems you should probably consult an attorney first...at least, here in northern Illinois. Some attorneys can do "cram downs" where a lender accepts a sale with a price below either the appraisal or the mortgaged amount to get the property off the books.

Right now, investors can probably pick and choose, especially if they have the funds.

It's not a pretty picture and it's not going to go away anytime soon.

C 2007 Move UP to Naperville Blog, Eileen Landau