But securing a home loan has become a very lengthy process, often between 30-45 days. Loan Officer Paul Salazar said "With this bailout it's actually taking that bad debt off and making these investors liquid again so they can lend out."
Salazar says even before the bailout lenders began tightening requirements to reduce their risk. He adds "Everything is full-doc now. No more what they call liar loans or adjustable rate mortgage loans." And you need a higher FICO score to qualify. Salazar said "Now you need at least 680 to 700 to participate in the good rate."
Many of these houses which sell for less than 200-thousand dollars have lost over 100-thousand dollars in value in just two years. But Tom Avent said buyers need to be patient because banks are overwhelmed by a foreclosure inventory. Avent said "A lot of them got pre-approved a year ago and they think that they're still good but lenders have changed their guidelines."
Paul Salazar says we can't gauge the long-term effects of the government bailout until the details of the deal are known.
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