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25 September 2008

Qualifying for that bond, by Deon Lessing
RodneyHayter.com
In as little as one hour, provided the necessary information is available, a mortgage originator can pre-screen a buyer and determine their credit worthiness.

Before the introduction of National Credit Act (NCA), a buyer's affordability was based on 30% of his gross income without taking liabilities into account. Where this may have been a far simpler procedure than the process used today, it often led to buyers being over indebted. Today, much more weight is placed on the client's surplus income. The service of pre-screening buyers plays an important role in making sure clients have enough disposable income to provide for their bond repayments.

The first thing to do is check the client's gross income and make sure he qualifies for the purchase price of the property. Once the expendable amount required to qualify is determined, the next step is to minus the client's expenses from his gross income to see whether he has the required surplus available. We require the client to sign a declaration for us to undertake a credit bureau check. Information is also acquired by conducting an expenditure interview.
RodneyHayter.com

The chain gang that could knock house sales into shape
The Independent - UK
It's clear that buying and selling property in the autumn of 2008 will be hard. Agents are currently agreeing an average of just six sales a month, according to the latest figures from the National Association of Estate Agents - down from an average of 16 this time two years ago.

But it's easy to forget that even when the property market is booming, the process of buying and selling a home seldom runs smoothly. Dealing with solicitors who keep things close to their chest, and trying to negotiate between all the relevant parties - typically during the course of a working day in the office - contribute to what is often described as one of life's most stressful experiences.

However, there may be a glimmer of hope on the horizon - an innovation that could at least help to unclog the market when housing finally pulls out of its slump.
Independent.co.uk

SA's tougher credit rules are buffer to crisis - NCR
Business Report - South Africa
Cape Town - South Africa is in a far stronger position than the UK and the US to withstand the economic downturn because it has a far more rigorous regulatory environment governing the extension of credit than these countries, according to Gabriel Davel, the chief executive of the National Credit Regulator (NCR).

The subprime mortgage crisis in the US arose because the market did not come under a regulatory structure, Davel said at the weekend.

In the case of Fanny Mae and Freddie Mac, people were provided with loans at a lower interest rate for two years. That rate then rose to the commercial rate - unaffordable to scores of so-called subprime mortgage holders.

This "teaser interest rate" market had never existed in South Africa, so the lending institutions were not directly exposed to this problem.
Business Report

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