Confessions of a Zero-Down Lender

This is a two part (well so far I’m planning a second post…their could be more) series of a couple of clients (names changed to protect identities, of course!) who have purchased homes utilizing 100% financing.   Both parties utilized similar programs but they wound up in entirely different situations.  

Mr. and Mrs. Spender eagerly wanted to purchase a home.  They were tired of renting and had two kids with one on the way.   They didn’t have a lot of money in savings and their credit had a troubled past (some of it was medical and some was plain irresponsible).    They live paycheck to paycheck but they are anticipating receiving raises and bonuses from their employer.   Their credit report shows that they rely on their credit cards and you can see on their bank statements that they dine out a lot and spend their money on frivolous extras.  

Based on their credit scores, I was able to provide them with an 80/20 from a sub-prime lender who does not verify where their funds are coming from for closing and would allow for the seller to pay up to 6% of the closing costs.   I structured their preapproval with the seller paying all the closing costs.  In fact, at funding Mr. and Mrs. Spender receive a check back for a majority of their earnest money.

Not long after closing, the Spenders discover that the gas heater in their home was defective (apparently this was missed on the home inspection?).   It just so happened that the repair company they called to repair it had previously serviced it and informed the previous owners that it needed to be replaced.  Mr. and Mrs. Spender decided to take their Seller to Small Claims Court and their Agent attended with them.  I had asked them what the results were, here is their edited response:

“Yes we took them to court and even though we had all the documents showing that the (sellers) knew the furnace needed to be replaced and needed to be fixed the judge did not find that we had proved our case… so we got nothing.. (the Real Estate Agent) came with us and she was just as shocked…  She too was amazed that all the paperwork we sign to protect us from buying a home with flaws, the (Sellers) even stated and had to initial that there was no problems with the heating system and even though we had documentation to show that they knew there were problems and didn’t disclose it… we got screwed to be honest…. They knew.. They didn’t care… and the judge just wanted to get out of there… It was a joke…

74 thoughts on “Confessions of a Zero-Down Lender

  1. This is the coolest video I’ve seen in a long time. Having been involved with the internet and the “web” since the days of the Lynx browser …it’s so cool to see how the internet and the web have come so far in a mere 13 years since I first started playing with Lynx, telnet, pico editor, etc. I love the name it’s taken on …web 2.0 …

  2. I signed up for your seminar on the 20th. Looking forward to hearing your thoughts on web2.0 and how it relates to real estate profession. Even though the video made sense to me (and was a bit nostalgic), I’m sure I’ll still be dazzled with your presentation! Will it have a cool soundtrack? 🙂

  3. Marlow,

    You already know most of this stuff inside-and-out! 🙂 But it is definitely not the same presentation as I’ve reworked the entire thing. This presentation is broken into two parts… The first part talks about the competitive landscape that agents face and the second part talks about how agents can use online tools to stick out from the crowd.

    Nonetheless, it would be fun to meet up with you again, so I would never knowingly discourage you from attending!

  4. K…just watched this again a couple more times..
    What’s the most fascinating thing is … it’s some ANTHRO prof that made the video!!!

    I can’t imagine what his normal lectures would be like!

  5. Brad,

    Webinars are so darn boring. I’m just figuring out how to make a live presentation interesting enough that it would be worth spending a few hours listening to, but I can’t imagine looking at a computer screen for a few hours and still keep it engaging. If I could condense the entire presentation into a five minute video (like the video above!), I’d happily do that, but my video skills are not at that level.

    To give you an idea of my hesitation, I’ve sat through more than a few webinars recently with a research company that provides info to Move. I’m yet to make it five minutes in one of these presentations before I start checking my email and reading blogs (paying just enough attention to be officially “present”). Until I feel like I understand how to be interesting in the medium, I’m not touching podcasting or webcasting the presentation for the general public.

    BTW, I did give a half-hour webinar recently for some Move employees, so I’m not completely against the idea, but I’m relatively positive that a majority of people who were connected via the internet spent most of the time catching up on email…

    Overall, I have a better solution… How about if I come out to Atlanta soon? I was just talking with some event organizers at Move and we were discussing some of the next areas we’d like to hit… I’m sure I could add Atlanta to the list! 🙂

  6. Dustin,
    Just a quick thank you! I enjoyed your seminar yesterday and it gave me a much needed shot in the arm. I am excited to getting back to my blog. Had been a bit brain cramped the past few weeks. Super info yesterday and your enthusiasm was fantastic. Time for a water break! 🙂

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