Creditworthy Shunned Under Tight New Mortage Rules

By Rob Quinn,  Newser Staff
Posted Jul 11, 2009 9:42 AM CDT
Real estate analysts warn that home sales where the transaction is between individuals are at their lowest for 25 years.   (AP Photo/Mark Lennihan)
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(Newser) – Would-be homeowners with good credit are finding themselves shut out of the mortgage market by stiff restrictions from wary lenders, the New York Times reports. Many believe that in an effort to move away from the laxness blamed for the financial crisis, lenders have gone too far the other way and are now turning away people who should be considered perfectly good risks. As a result, non-foreclosure sales are still at a quarter-century low.

Buyers are being turned away for a wide range of reasons, including being self-employed or having incomes that are sufficient, but irregular. The real estate industry warns that the housing market is unlikely to be able to lead the country out of recession, as it has done before, without greater efforts to unfreeze lending.  "Without further action, we’re not going to stabilize,” one analyst said. “The real estate recovery will take 10 or 12 years."