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Friday, October 05, 2007

Homeowners "Too Broke to Sell"

by Calculated Risk on 10/05/2007 12:00:00 AM

From the Chicago Tribune: Here's a new one: Being too broke to sell

A survey of mortgage brokers suggests that one in three consumers who recently signed purchase contracts canceled in August -- up from just 4 percent three years ago, according to the research firm that conducted the survey for Inside Mortgage Finance, a trade journal.

The cancellation rate undoubtedly was fed by two scenarios playing out: Many buyers couldn't get mortgage approval because lending suddenly tightened; or, financially strained lenders yanked funding from their borrowers at the last minute.

But another factor was at work: Sellers -- not buyers -- were in trouble as their closing dates neared.

"Our office had four sales in one week that failed to close because the seller didn't have the cash," said the real estate agent, who declined to be identified because she feared office repercussions.
Actually this isn't "new"; if the seller is making the payments - and can afford the payments - the lender won't do a short sale. The only way out is for the seller to bring cash to the closing. I wrote about this in March: Escrow to Seller: "Bring Money". Tanta called this "making your downpayment after the fact."