UH OH Kids Another Toy Taken Away With New Guidelines


Lake Charles, Louisiana has been blessed with a very stable and steady market.  The low interest rates have spurred Buyers to purchase homes and sellers have been getting good values for homes in Southwest Louisiana. Louisiana Realtors just released trends for the first quarter of 2010 showing an increase in sales.

Recent developments in the lending industry are changing again which will affect our housing trends.

As the days of 100% financing vanished and the media was exposing the mortgage industry gone by the wayside so to speak, USDA rural development loans filled the gap for homebuyers needing 100% financing.  What we have seen are buyers who want to buy but they don’t have enough saved to go with a FHA loan down payment.  Our real estate market became one where buyers financed “over list price” for a home and asked the seller to contribute buyers closing costs and pre paid items.  As long as the home appraised for the contract price it worked and it was a win/win situation for everyone. It has become very common for Realtors to write an offer at list price but ask for up to 6% in seller concessions.  Of course USDA recently ran out of money and which has not been replenished so if you had a USDA loan in underwriting it may or may not have made the cut.  11 Parishes in Louisiana were not re-funded with USDA funds.  Because of Hurricane Rita in 2005, Calcasieu Parish was extended funds and USDA loans are still being processed in Calcasieu Parish. Check with your loan officer to make sure the Parish where the home is listed will qualify for Rural Development or you may be up a creek without a paddle as they say!

As if the USDA headache wasn’t enough, the financial industry guidelines have changed yet again….

kid crying

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I got a not so good update on the changes coming this afternoon from a trusted source, Craig Boudreaux, Loan Officer with Louisiana Mortgage Associates.  Craig shared with me the following information:


“If a purchase offer is written for more than the list price and buyer asks for closing costs, the loan will be denied due to the artificial increase in the price to cover closing costs and pre-paids – This is for ALL types of loans.”

This is not only going to affect Buyers but it also means that Sellers may have to accept less money if they want to sell their home.  So if you plan on writing a contract this weekend, don’t get caught off guard!

Just like Hurricane Season starting June 1, we better all get prepared for the storm coming!


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