Wall Street Journal staffer Joe Light reports that Flint, Mich., residents have a new concern on top of lead in their drinking water: Home buyers must prove there is no contamination at a property or banks won’t qualify a mortgage for a buyer.
What this means is that if there's no buying allowed, due to the lack of ability to get housing finance, there's not a heck of a lot of selling that's going to go on either. When transactions effectively stop, that means properties have no value. Light writes:
It isn’t uncommon for lenders to adjust requirements during or after disasters such as fires, earthquakes or hurricanes. Some advisories sent by lenders for the Flint crisis cited the president’s emergency declaration for Genesee County, Mich., as the impetus for the change, although they stated the restrictions are limited to Flint.
“There’s no doubt this will have an impact” on the city’s housing market, said Marc Reneau, president of the Michigan Mortgage Lenders Association.