Posted on: 06th Jul, 2010 10:13 am
Hi board,
I am curious why a bank would be more opt to sit on a foreclosed home rather than rent it out or bend policies for a first time buyer? I understand about the housing market bubble and all the sub prime loans, but arent they still losing money?
The reason I ask is for my own case. My wife and I make close $100,000 but due to past credit issues and lack of down payment we can not get a loan. We currently rent a house with a monthly payment of $1300 which is more than some people's monthly mortgage payment.
It just seems it would be more benefical to the bank,us and the market if a bank could look at our income,talk to our current landlord and try to make it work. I know there is more to it and in a perfect world that might be possible.
I am curious why a bank would be more opt to sit on a foreclosed home rather than rent it out or bend policies for a first time buyer? I understand about the housing market bubble and all the sub prime loans, but arent they still losing money?
The reason I ask is for my own case. My wife and I make close $100,000 but due to past credit issues and lack of down payment we can not get a loan. We currently rent a house with a monthly payment of $1300 which is more than some people's monthly mortgage payment.
It just seems it would be more benefical to the bank,us and the market if a bank could look at our income,talk to our current landlord and try to make it work. I know there is more to it and in a perfect world that might be possible.
KS, your poor credit makes you a risk. Lenders are risk-averse these days far more than ever before. With all the foreclosed real estate out there, no lender wants to take on a risk that they think will lead to another piece of foreclosed real estate. Your income isn't sufficient to bend someone's rules - you need to provide them with assurance (on their terms) that you'll make the payments that would be required.
Thanks for the reply George. The market really tightened everyone's loaning guidelines. At the height of the market, we avoided buying a home for this particular reason. We didn't have great credit, but we could still have gotten loan no problem. It is almost like now we are being punished for doing the right thing. I understand we are a risk, but isn't the bank losing money by sitting on numerous empty houses?
That may be an appropriate way to look at it, but they won't agree. The risk involved in lending to someone whose credit doesn't meet their standards is considered too high for them to cut such a deal. Risk piled on risk isn't something they're trying to do.
Makes sense and I don't blame them for that. It just stinks for someone who can afford a mortgage, but can't qualify for one and then you see all these empty foreclosed homes. I have been looking non-stop for a good rent-to-own house, but they seem to be very rare. I also looked into assuming a mortgage, but those also have strict qualifications also. Thanks again for the replies.
You should concentrate on improving your credit, with some solid effort you may be surprised on how much you can increase your scores by.
