California real estate agents and buyers face a strange lending environment in 2008. Interest-only and 100% loans are history. Subprime borrowers are out of luck. In the wake of the mortgage credit meltdown, lenders have become extremely risk adverse, and the secodary market is evaporating. Some types of loans have simply disappeared.
Although buyers are facing more stringent qualifying standards, we agents will continue to close transactions using methods that we learned during the last downturn.
Banks are looking for no-risk borrowers now. A FICO (credit) score of 620 no longer guarantees that a buyer will qualify for a conventional mortgage. One recent buyer I heard about had a credit score of 799, but he was self-employed, and he just squeaked by because of a 25% down payment!
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