Are You Buying Or Selling A House In “Declining” ZIP Code?

Critics call it the new redlining. Many of the country’s largest mortgage lenders are imposing loan restrictions in entire counties or ZIP codes they rank as risky or “declining.”

On Jan. 25, Countrywide Bank sent mortgage brokers a list that categorized hundreds of counties as “soft markets” with rankings from one to five, in ascending order of perceived risk.

In areas rated 4 and 5 — roughly 100 counties in metropolitan areas nationwide — Countrywide said it will require 5 percent larger down payments from most applicants.

If a loan program previously allowed a minimum 5 percent down payment, now applicants will be required to come up with 10 percent to qualify.

An additional 970-plus counties are rated more moderate risks, in categories 1 to 3, with 5 percent down payment increases if an appraisal report indicates there is an “oversupply” of houses for sale or a marketing time over six months. (Both King and Snohomish counties are rated as a category 1.)

Other national lenders have distributed their own proprietary “declining markets” lists.

Read the entire article written by Kenneth R. Harney at SeattleTimes.com

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