Creditworthy Shunned Under Tight New Mortage Rules

By Rob Quinn, Newser Staff

Posted Jul 11, 2009 9:42 AM CDT

(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."

[Images (2)]

[Quotes (1)]

Real estate analysts warn that home sales where the transaction is between individuals are at their lowest for 25 years. (AP Photo/Mark Lennihan)

"It is not enough to help a borrower own a home,%u201D a spokesman for Fannie Mae said. %u201CWe must also help ensure that they will be able to stay in the home over the long term.%u201D (AP Photo/Paul Sakuma)

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The credit pendulum is stuck at ‘stupid.’ I am turning down loans every day that my grandfather in his Ponca City, Okla., savings and loan in 1935 would have been happy to make. And he was tough. - Lou S. Barnes, owner of a Colorado mortgage bank

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COMMENTS

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Showing 3 of 9 comments

gilgordan

Jul 13, 2009 1:28 AM CDT

This has been a problem recognized by FED as early as 2007, but ignored. Banks and Investors tighten credit standard, use the obsolete and biased Credit Scoring algorithms to adjust to market conditions, add in behavioral neural nets to profile customers, and you have all the ingredients for economic profiling and geographic, personal redlining. The entire financial industry is a disgusting garbage pool, and the regulatory bodies have allowed been complicit and complacent. Change we can believe in is necessary to right the injustice that has been going on for 30 years

easterner

Jul 12, 2009 2:05 AM CDT

I don't think we are all stupid.I (and others) for one didn't believe that Obama was really going to get any REAL co-operation from any republican.Sen. McCain’s failure to defend his running-mate on number of occasions kind of gave me a clue.The republicans politicians and their minions have a bad habit of kicking(or throwing if you prefer) each other under the bus when they lose an election not to mention they are just as hypocritical as the "masses" are.The republican embarrass their wives and children by getting caught with their pants down and send erotic emails,(too stupid to to use different names). Let their children practice unprotected sex and then tell us "the masses" not to.While this is all coming to the attention of "the masses" Obama is trying get this country back on track. No I think it's the republicans who are too stupid to see what Obama is doing.Do you really think McCain could of done better ?

plstyle

Jul 11, 2009 6:52 AM CDT

Doesn't anybody proofread what they post any more?

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