Blacklisting Hits Home Sellers

[formercia]

http://finance.yahoo.com/loans/article/104585/Blacklisting-Hits-Home-Sellers;


by Dawn Wotapka and Marshall Eckblad
Saturday, March 1, 2008provided byWSJ

In the nation's worst-hit real-estate markets, home sellers are suffering a new blow: They are being blacklisted by lenders.

As property values decline and credit markets contract, home lenders nationwide are growing ever more unwilling to finance home purchases in sharply declining housing markets, driving prices down further. In some cases, lenders have ruled out entire geographic regions and property types altogether, most notably high-rise condominiums in South Florida and Las Vegas.

Lenders including BankUnited, a unit of BankUnited Financial Corp., and Vertice, a wholesale lending unit of Wachovia Corp., have elected not to lend to some areas or properties because of declining prices. Countrywide Financial Corp., the nation's largest mortgage lender, considered a similar move last week before reversing course, and other lenders have tightened underwriting guidelines for slumping markets so as to make financing nearly unattainable.

--snip--

Moreover, the blacklisting isn't always obvious. "We don't call it blacklisting," said an official at a large bank. "We just don't write the loan."

[Saturday]

1. That's very interesting, thanks for the article. nt

[Demeter]

2. Thanks very Much!

[ayeshahaqqiqa]

3. Ironic

from the title I was assuming they weren't loaning to minorities -- that used to happen a lot. Now they are balcklisting pricey places where mostly whites live instead.

[Doctor_J]

4. sounds more like blacklining than blacklisting

I usually think of blacklisting as be directed toward individuals, not zones. When I read the thread title I was thinking of something else entirely.

[krkaufman]

5. Yeah, very confusing headline.

It sounds like neighborhoods and properties are being targeted as too risky, and so sellers in those areas are feeling the pain.

The headline was making it sound like someone who sold their home would then be blacklisted from ever receiving another loan. (Or maybe my brain just don't work gud.)

[krkaufman]

6. This except seems somewhat disconcerting

There are "lists circulating" from banks, says Peter Zalewski, a broker with Condo Vultures Realty LLC, and those lists are pushing down prices when news of the black-marked properties spreads.

I would think banks wouldn't be able to share this sort of information amongst their industry. Sounds like collusion, or anti-trust violations.

[bemildred]

7. Well, that will help keep prices from collapsing. nt

[Baby Snooks]

8. Just reality

Too little too late in one way but in another way someone has to put the brakes on. In some states, it is expected that property will be devalued by 20-30% so if the buyer puts down 10% the lender potentially has risked losing 10-20% of loan value they will have to write off if the loan is foreclosed on. No one is immune from going under in this economy. Even the rich are being foreclosed on. They also fell into the trap of low-interest ARM home and home equity loans.

Next to get hit by all of this are the local taxing districts which will be faced with the reality that their tax base is 20-30% less than it was when the budgets were approved.

Our economy for all intents and purposes has collapsed. Someone commented the other day that the reason why the Federal Reserve is trying to keep everyone afloat is so that the economy will actually collapse in the fall so the Republicans can blame the Democrats.

Would that surprise anyone?