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Here’s a great example of what we were talking about in this story on FHA and VA financing, government-insured loan programs popular among first-time and veteran buyers because of their tiny down payment requirements. But people using those loans are having a tough time using them to buy houses that have been repossessed.

From my story:

… the hope that buyers using these loan options will dramatically help reduce the stock of houses on the market might be ill-placed. Buyers looking for a deal on a foreclosure using one of these loans are encountering a tougher situation than they expected: banks turning down offer after offer.

If banks have another offer from a buyer holding cash or even a typical loan, they are reluctant to approve offers from buyers using FHA or VA financing because the programs require sometimes significant fixes be done to the property before the sale closes, like installing new appliances in a thrashed kitchen or resurfacing a holey floor.

Here’s the kind of house that’s a good example of the issue. Realtor Jim Klinge sells homes that have been repossessed by Countrywide, and puts together video tours of his listings. Near the end of this one, about a listing in Oceanside near the “back gate” of Camp Pendleton, he points out an unfinished addition to the house. That could cause a wrinkle if an offer comes in with FHA financing, Klinge says. Check it out:

KELLY BENNETT

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