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Just a heads up as to what we're seeing in Indiana ("Foreclosure Capital of the World" ) that I'd thought I'd share.

In the past, when dealing with a Sub2, we could usually get by writing a letter to the bank (when the HO was getting another/new mortgage) stating there was an agreement/lease/etc. and they would look at that as 90-95% "to the good" in the HO's favor--an asset if you will.

With the sub-prime mess going on, we're starting to see a couple of negative trends.

First, the bank wants to see ALL the paperwork on the deal (and it is taking FOREVER to get it looked at-there is a general slowing down, period, in the time its taking for deals to be approved--underwriting is WAY backed up). Don't even try to back date it.

Second, and this is new, IF they count our deal at all (and that's getting "iffy" if there is even a hint of the HO not having the income), the banks now are only valuing it at 65-70%! As an example, if the PITI was $1000/mo. the bank would take $9-950. Now it's more like $650. So, in effect, the HO "loses" $4,200 in income to purchase ratio.

Just something to be aware of when/if the HO asks.

FWIW