Missing document puts buyers' deposit at risk

REThink Real Estate

Q: My buyers have excellent credit, no debts and a lot of money in the bank, but the lender can’t fund the loan because it’s missing one piece of paper from the appraiser. All contingencies have been removed. Can the buyers still get their deposit back? –Juanita

A: I hear and completely understand your frustration. Virtually everyone who knows anything about real estate agrees that the lending guidelines of the subprime era — when no-money-down, no-assets, no-income documentation and bad credit were all OK — were just too loose.

I, for one, am of the opinion that no one can take a loan that a lender won’t give them, so from that perspective, you can see how the lenders’ own behavior in funding loans without appropriately qualifying borrowers played a major role in creating the housing crisis we’re now feeling our way out of.

Unfortunately, the lending industry’s recognition of how subprime lending contributed to this housing debacle has not resulted in a mature, reasoned conversation about what lending guidelines are appropriate, keeping the risk of the borrower defaulting at a minimum while still allowing creditworthy borrowers to obtain loans and keep the housing market moving.