Too Broke to Sell Their Home

Mary Umberger is a real estate columnist for the Chicago Tribune.

She recently wrote that the trade journal "Inside Mortgage Finance" surveyed mortgage brokers, and found that 33% of purchase contracts in August were canceled.

This compares to 4% three years ago.

A lot of these cancellations were probably caused by lenders either canceling loans or tightening their standards during the sub-prime credit crunch.

But, another factor not widely discussed is that some sellers (not buyers)were short cash at closing time.

Sellers?

Normally, sellers walk away from closings with a check. But, these days, many sellers do not have a lot of equity. They took 95 - 100% mortgages, or tapped lines of credit.

Now, at closing, they do not recover enough to cover seller fees and commissions.