New Trouble Knocks Flint as Mortgage Firms Require Proof of Safe Water

[question everything]

Source: WSJ

Flint, Mich., residents have a new concern on top of lead in their drinking water: Some mortgage lenders say home buyers must prove there is no contamination at a property or they won’t make a loan for its purchase.

Local real-estate agents and lenders worry the new restriction could be another punch in the gut to the city’s housing market, which has long suffered from economic distress after the departure of major auto industry employers.

“The tragedy is an already depressed community is now likely to see housing values plummet not only because of the hazardous water, but because folks cannot obtain financing,” said Daniel Jacobs, an executive with Michigan Mutual, which recently issued a notice to its employees requiring that homes pass a water test before it will make a loan.

Similar notices have been sent out by other lenders, while some major banks, including Wells Fargo & Co. and Bank of America Corp. , said obtaining a loan could be difficult if a home doesn’t have potable water. ​

(snip)

At issue, lenders say, is how to interpret government mortgage guidelines. The Federal Housing Administration, which backs loans to less-creditworthy borrowers, states that a home must have “a continuing and sufficient supply of safe and potable water.” An FHA spokesman said the agency plans to put out a document soon to address lenders questions on the situation. So far, Fannie Mae and Freddie Mac, the largest backers of mortgages, haven’t changed their loan requirements in Flint.



Read more: http://www.wsj.com/articles/new-trouble-knocks-flint-as-mortgage-firms-require-proof-of-safe-water-1454544966

[drm604]

1. I assumed that this would be a problem.

Both lenders and buyers are going to be very wary.

[Snotcicles]

2. Phase II of Flint's Gentrification. eom

[KamaAina]

9. You have to wonder who's waiting in the wings

to snap up the whole damn city at pennies on the dollar.

[Snotcicles]

10. It worked in Detroit and Benton Harbor. eom

[Leith]

3. The Very Sad "Good" News Is

That you can purchase an entire house for what would be called a down payment in most parts of the country.

Read it and weep.

[keithbvadu2]

4. How soon will our republican majority Congress

pass a law repealing this requirement?

They have to protect their governor for poisoning children.

[ChairmanAgnostic]

5. This was to be expected. Same thing

in central Illinois, where extensive, unsupervised coal mining now results in subsidence claims. People may have gorgeous, large houses, but they cannot sell them. Nor, can they open their garages, front doors, or use all of their back yards, and my family tells me.

Subsidence was a known danger for many decades, yet it wasn't until about 8 years ago that the bans started. Sure, that was man made, but over a century of coal mining does have some impact.

In Flint, this was about as deliberate as one can be, reckless disregard, etc, without being intent on doing harm. Gov. Snyder has effectively killed an entire city of 100,000 innocents. He poisoned many of its citizens. He takes about as much responsibility as Sarah Palin did about her targeting Gabby Giffords.

Gov. Snyder needs to be sued.

[Spitfire of ATJ]

6. Here in Vegas a backyard pool has to be clean and fully operational to close.

[iandhr]

7. Not surprising.

If you were a mortgage lender would you issue one on a house with lead in the water?

[dixiegrrrrl]

8. Here in Ala. there are no restrictions that I know of

Homes are sold "as is, where is".
although you make an offer subject to a house inspection, you pay for it. ( about 300.00)