Categorized | Commercial

Noose on Credit Availability Crimps Housing

Noose on Credit Availability Crimps Housing
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The recovery of the nascent housing market was greatly hampered by the cautious lending practices applied by the banks in last year. More mortgage applications were rejected by the largest lenders in the nation. Lenders, nowadays, have become too conservative when our housing market has become extremely fragile. With the nation’s economy still wobbling, mortgage should be easier to obtain for the qualified borrowers.

The same lenders contributed to the inflation of the housing bubble. The main groups of people who are being turned away by the lenders are the unemployed, those whose incomes are falling and the self-employed. Another contributor to tightness in lending is the government entities like Fannie Mae. For every 10 loans, they account for more than 9 of them, collectively.

The role of these firms is to guarantee mortgages if they meet their standards. There are no signs of easing in credit this year .Except Delaware, all the other states recorded an increase in denials. Buyers with cash are the ones that the market is relying on. Borrowers are discouraged from applying for the loans by the stringent deadlines. Government entities have contributed to the restrictions in accessing home loans despite the growth in the economy.

They aggressively force the lenders to repurchase the loans when they go bad. Borrowers can hardly access refinance loans because they have been left with extremely less equity, owing to the falling home values. Major causes of loan applications are insufficient collateral, poor credit history and debt-to- income ratios.

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About Drew Wilson

Drew focuses on the Commercial and Mortgage/Finance categories.

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