da Vinci Realty Blog: October 2009

I'd like to know when it became OK to discriminate against Buyers who use an FHA 3.5% down payment loan program.  I recently submitted an offer for a newly engaged couple who had amazing credit, substantial savings, and enough liquidity to put 20% down.  They chose a foreclosed home that was owned by Freddie Mac. A great home that was move-in ready.  They made a strategic decision to take advantage of an FHA program that allowed for 3.5% down.  They were going to invest the remaining 16.5% in updating the property to ensure they will earn a substantial gain on their investment.

We were in a competing offer situation.  My clients put in a full price offer and waived their Inspection condition. I was told our offer was not successful.  It was implied by the Seller's agent that our offer needed to show a "stronger commitment" on the part of the Buyers.  EXCUSE ME!!!!

The Seller actually felt my client's offer was not strong enough at full price and no inspection condition????  It is my opinion that Sellers feel anyone who is not bringing 20% down is a weak Buyer.  I'm sorry....since when did the value of money change based on where and how it came to be?  $400,000 is $400,000 whether it's cash, a Conventional Loan, VA Loan, or FHA loan.

I believe there can be a case made that a Seller who discards a Buyer because they made a choice to use an FHA loan is border line discrimination.  I'd like Freddie Mac to tell my client, who is an Active 20yr Navy soldier and his Fiance who is a consultant for the Dept of Defense, that they aren't committed to buy their dream home because their choice to use FHA (which comprises nearly 40% of all purchase loans in 2009) is weak.

Where has this market implosion taken us????