It is bank to bank, but the banks are tightening up. With so many bad loans on the books, they're being very conservative now. The days of 100% financing (except VA) and $10,000 allowances are limited. The banks want to know it's a good loan and the buyer is invested. If a buyer has nothing in the house, what's to stop them from walking away later? Many banks are cutting out a lot of the closing cost assistance, allowances and gift funds being used for down payments.

I had a deal that died recently (foreclosure) because the bank sent back an addendum stating they would only pay 3 months of prepaids. The agent insisted NO ONE would escrow more than 3 months. She was determined that this was an across the board new rule, but I had a current good faith estimate and a settlement statement of a very recently closed transactions showing otherwise.

So, banks have their prerogatives... and they're all tightening up!

Does anyone know of a lender giving mortgages with less than a 640 credit score right now? That's what I've been hearing. And the debt to income for ALL debt including mortgages is being capped under 40%. Does anyone have any proof otherwise?

Recently some GMAC foreclosures that I've worked with have instituted the rule that, if the buyer uses GMAC financing, they will pay up to 3% in closing costs. If the buyer gets a prequalification from GMAC but then uses other financing, GMAC will pay 1%. If the buyer doesn't do either, they won't consider any concessions of any kind whatsoever.

I definitely haven't heard of any across the board rules (among different sellers/banks) that limit closing costs to 1%.

Believe it to be 'bank to bank' decision. On an FHA loan in foreclosure (Murfreesboro), it was explained to us as the new standard for government loans. Joe Hafner of John Jones Real Estate might be an excellent resource for you (is on Trulia from time to time); has been a pleasure to work with even through a long, drawn out process.

Each bank has different rules and it may depend on the situation. If it is a foreclosure I have seen 3 points paid but it all depends on the price. The banks are typically more concerned with allowances for work ,title and home waranty's. If it is a short sale it is a differnt story and the banks may limit the points paid. On sho.
rt sales the banks are looking for a clean deal with little to no incentives


Keith Manson
First Weber Group
Certified Distressed Property Expert
Greenfield,Wisconsin

Vicki, Is this a short sale transaction that you are working with?