From the Washington Post:
"Most of the [Washington, D.C.] region has been tagged a "declining market" by the powerful loan underwriters who review mortgage applications.Question: Do you think this young couple could truly have afforded this house? After they spend their last $25,000 on renovations, then what? How does one sleep at night with no savings?
. . .
In November, a 'declining market' flag was enough to scuttle a $510,000 home purchase planned by Tony and Sarah Pierson, both Army captains. They were only days away from closing on a brick Cape Cod near the historic district in Leesburg. But the deal fell apart when their lender, USAA First Mortgage Origination, notified them that, because of that flag, USAA would no longer honor its preapproval commitment for a package of first and second mortgages covering 100 percent of the price.
Even though the appraisal showed a value higher than the Piersons had agreed to pay for the home, USAA told them it would approve the deal only if the couple came up with a 5 percent down payment. 'Five percent of half a million dollars is $25,000,' Tony noted. They had that in savings, but had been planning to use it to renovate the house. They didn't close the mortgage'.
More from the article:
"Jim Foley, senior vice president for George Mason Mortgage's Bethesda office, said automated underwriting systems from investors he works with are flagging all of the District plus the following cities and counties in Maryland and Virginia as "declining markets." In Maryland: Calvert, Charles and Prince George's counties. In Virginia: Alexandria, Arlington, Clarke County, Fairfax County, Fairfax City, Falls Church, Fauquier County, Fredericksburg, Loudoun County, Manassas, Manassas Park, Prince William, Spotsylvania, Stafford and Warren".