Most people can't afford to take out a mortgage on a new home while they're still paying the mortgage on their existing home. That's what bridge loans were made for.
The problem is, bridge loans--or "gap loans," as they're sometimes called--are increasingly more difficult to get. Rising unemployment, shrinking incomes, and tightened lending regulations have made it more difficult for borrowers to qualify for the loans they need to move from one house to another.
The increased regulations on the lending industry were necessary, but the effect on bridge loans was an unintended consequence that is continuing to keep home sales from recovering as much as they otherwise could.
It's my understanding that one of the candidates running for Pennsylvania Senator Arlen Specter's seat is proposing that congress provide guarantees on bridge loans, with very strict guidelines.
If your business is real estate, you'd do well to call your congressman and let him or her know that we need this kind of help.
Tuesday, July 21, 2009
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