The Washington Post recently published an interesting article on the challenge faced by individuals in their 20s and early 30s trying to buy houses in overheated markets like D.C. The Post quotes a realtor who is full of tricks to help his young buyers qualify for mortgage loans. Here’s an excerpt:
Iobst recommends a few tricks to help his young clients stay competitive. One is to have their parents take over monthly bills for a few months so their bank accounts can stay full — making it appear to lenders that the buyers really do have the cash on hand to seal the deal.
This isn’t new. I have a friend who pulled a similar trick years ago when he was relocating from L.A. to Atlanta. He closed his bank account in L.A., opened a new one in Atlanta, then showed the lender his closing bank statement from L.A. as well as his new one in Atlanta. Told the lender he had two accounts. The lender believed it and he qualified. But if real estate agents are pulling tricks like this, I’m not sure they’re doing their clients a favor if they end up defaulting in a few years…
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.