100% Financing to Investors Harder To Find

Mortgage brokers and direct lenders have tightened lending guidelines to those with excellent credit. So, what does this have to do with foreclosure? Everything. Often, a property owner may be bailed out by an investor/buyer on a straight sale or a leaseback with a repurchase option. These types of investors do not consider the transaction to be profitable if they have to put in much of their own money. It is the leverage that attracts them – that is, making money on other people’s money – although, in the end, they still assume a great deal of risk that they will have to “come out of their own pocket.” Usually investors want 100% financing to bail out a property owner in foreclosure. Recently, some lenders are pulling back and are only doing 95% financing which has dramatically restricted the options to stop foreclosure. There are still options but the smart property owner should avoid wasting time with buyers/investors who will let them down in the end. Property owners should make sure they are dealing with a buyer/investor who will be able to get financing on terms they can live with. The terms should all be disclosed up front and in writing. The seller in foreclosure should know what the buyer’s expectations are for financing and whether they are realistic. For now, 100% financing still appears to be available to buyers with 800 or near 800 credit scores and “seasoned funds.”