Daily Real Estate News March 12, 2007Countrywide Financial Corp. has instructed its brokers to no longer offer zero-down mortgages as an option for borrowers, the Wall Street Journal reports.
That's because such loans are among the biggest reasons for a recent and sharp increase in the level of delinquencies at U.S. home lenders. Countrywide joins such other companies as General Electric Co.'s WMC Mortgage and Washington Mutual Inc. in requiring that loan applicants have at least a 5-percent stake in their homes.
Previously, "if you breathe and have a Social Security number . . . you were going to get a house," notes Mark Cady of Market Street Mortgage in Houston. Now, lenders are demanding that applicants have higher credit scores and contribute a bigger down payment, among other requirements.
While the flow of money available to the subprime borrower community is likely to slow considerably as a result of this trend, observers note that lenders not subject to federal regulation will continue to offer higher-risk products such as 100-percent financing and interest-only loans.
Sources: Wall Street Journal, Houston Chronicle
Jennifer Bunker, CRS, GRI
Utah Real Estate Broker
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