So what really happened is he found a deal where a home was selling below current market for whatever reason. Good for him, but not something that happens every day, obviously.
THAT truly shocks me. It's interesting to say the least. I would have thought lenders would have learned their lesson after the past year. The real problem was never people with "bad credit histories", but people who were in houses they couldn't afford, with no equity, in a falling housing market.
Finding a home below market value is something that Real Estate Investors do all the time. 70% of Appraised Value is standard for most RE investors, and the big boys purchase properties at 20-50% of Appraised Value. Paying Fair Market for a home is really for the suckers that are more concerned with the color of the carpet and the size of the master bathroom.
The Problem was that TOO much emphasis was placed on the credit score. It is not the end all be all of an individuals ability to repay a loan, hold a job, etc. They were putting emphasis on score and being very lax on debt to income ratios.
For Home loans you don't even need much of a credit history, since it is a secured loan, a score will do just fine most of the time. Now if you are looking at lines of credit and unsecured debt, they examine the depth of your history.
for example, I have over 80,000 in unsecured debt/lines of credit. Nothing but a signature to obtain it, and not very easy to get. On the reverse side, I could get a home loan for 400,000 with no problems.
