Here’s the latest from Aubrey Cohen over at the P-I: Mortgages harder to get for local borrowers
Lenders who previously approved mortgages to people with bad credit, no down payment and little or no documentation of income now are refusing loans if even one of those three factors is questionable. This is true even in Seattle, where homes have so far continued to appreciate.
“I see a number of individuals even in our existing pipeline that maybe a month or two ago were being choosy,” said Adam Stein, president of American Brokerage in Auburn, and the Washington Association of Mortgage Brokers. “Now they’re realizing that maybe they held out too long.”
Lenders had less incentive to screen out risky borrowers during the go-go real estate market of the past few years because they quickly turned around and resold mortgages on the secondary market. And, while home values were increasing fast, borrowers who could not make payments could still sell for more than they owed.
But that’s changed.
In recent months, home prices have declined in much of the country, borrowers increasingly are defaulting, and investors are fleeing from the home market.
Consider this story a precursor to next month’s news that sales have continued the historic slide that began with last month’s 26% YOY drop in pending sales. Speaking of which, as was pointed out in the forum by AmazedRenter, according to RE/Max (via USA Today), sales in Seattle so far this month are down 47% from last year. Yikes.
But don’t worry sellers, I’m sure prices will just keep on rising. Everybody wants to buy a home in Seattle. If only they could get a loan, that is…
(Aubrey Cohen, Seattle P-I, 09.25.2007)