Per an Area Sales Manager:
Unlikely. That would violate a number of statutes, I would think. More likely it was a misinterpretation of our anti-flipping policy, which states that we cannot do a loan for a borrower on a property that has changed hands (had an ownership deed change) in the past 90 days. We first thought that ruled out REO’s since they take it back from the defaulting owner, and list it for sale within 90 days (if they are lucky in this market.) But this would obviously be an exception to the anti-flipping policy.

That’s my main guess as to where that comment would come from. Otherwise, it may be somebody who tried buying a completely trashed house, and the underwriter required the health and safety related deferred maintenance to be cured prior to close. (most lenders require these items to be addressed.) As a point of interest, we are one of the few remaining lender willing to do an escrow hold-back of 1.5 times the estimated repair bid and allow the deal to close prior to the completion of the items. It’s obviously the buyer’s monies that would be held by escrow, until we have the appraiser certify that the certain items were cured. It’s quickly released after we get the appraiser’s reinspection cert.

Other than that, I believe I have the authority to speak for the bank, as an area sales manager, that the report that US Bank does not finance REO is wholey false. In fact, we have a CRA program still at 97%, even in a declining market (no 5% LTV reduction). The program is quite lenient, even allowing for the 3% to be a gift directly from the seller!!! No need for the Nehemiah game on an expensive FHA! In light of this program, I would think that we are one of the most AGGRESSIVE lenders in the area of first time homebuyers.

And in light of the escrow hold-back program, that would make us one of the most REO-friendly lender in the industry!