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Readers Offer Other Loan Sources

July 14, 1996

Robert Bruss' advice in his July 7 column ("Pre-Approved Buyers Rejected, Need to Get Tough With Lender") was misleading. To respond that "your seller is virtually your only finance source" and "if the seller really wants to sell, he or she will agree to finance your purchase" is, in almost all cases, incorrect.

There is a very small portion of the population of home sellers that can finance a buyer's purchase. This would involve a seller with no mortgage or the ability to pay off any existing mortgage with means other than the full purchase amount.

There is no correlation between a seller's desire to sell a home ("if the seller really wants to sell") and the ability to finance a purchase of it.


Santa Monica


Bruss' response furthers the public's opinion that real estate lenders are greedy, uncaring machines who perform a service for only the most qualified of real estate owners.

Suspecting the lender of a "low-ball" appraisal and suggesting that the buyer "intimidate" the lender are poor choices of words by Bruss. The large availability of federal, state and private funds to provide real estate mortgages for fixer-upper property, like the FHA 203(k) financing for owner occupants and investors, should have been his response.


Loan Officer

American City Mortgage Corp.



A lender has no obligation to loan on a property just because the property appraises for the purchase price. Because the home is ultimately the only security for the loan, lenders will refuse to lend on properties that do not meet the lender's minimum property standards.

The property may be worth every bit of the purchase price but may have certain characteristics that make it hard to finance. As an appraiser, I appraised many homes for the purchase price but denied the loan because of other circumstances. For example: cantilevered hillside homes built on stilts, a home with another house built without permits in the sideyard, a crack house in the San Fernando Valley.

As the writer's loan had been turned down four times because of the property, it will do no good to argue with the lenders. Bruss should have recommended that the buyers apply with a lender that wants to make this kind of loan:

* A construction lender that will hold funds to pay for the repairs if the buyers don't do them.

* An FHA 203(k) lender that will provide a rehabilitation loan.

* A B lender that places less emphasis on the property and more on the buyers if there is sufficient equity.

All of these alternatives would cost more than a regular mortgage from an A lender, but that higher cost is probably already built into the purchase price of the home.


Pacific First Financial


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