In spite of record low rates, lenders more cautious to issue loans than ever before
Despite the lowest interest rates on home mortgages since at least the 1950s, banks are hesitant to extend more loans.
Gene J. Puskar, AP
Despite the lowest interest rates on home mortgages since at least the 1950s, banks are hesitant to extend more loans, according to the Wall Street Journal.
Recently, Fannie Mae and Freddie Mac started forcing banks to buy back the broken loans they sold them before the recession.
In order to prevent this from happening again, banks plan to protect themselves by tightening restrictions on future loans. Bank statements, tax returns, appraisals, pay stubs and multiple credit checks are some of the documentation needed to secure a home loan, according to the Wall Street Journal.
"Why do I care about that $100 deposit? Why am I triple checking your credit score?" Barry Sturner, president of Townstone Financial, a Chicago lender, told the Wall Street Journal. "Because I'm scared to death of the buyback."
The average loan application to be turned down in the month of August had a credit score of 734 and a down payment of 19 percent, according to the Wall Street Journal, citing Ellie Mae, a mortgage software provider.
Have you been turned down for a mortgage due to stricter rules? Let us know by commenting below.
EMAIL: sparker@desnews.com
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I was surprised how much information I had to provide my bank just to get a home equity line of credit. Despite nearly perfect credit, ample income, 20-year history with the bank, and all the required documentation, it was a long and difficult More..
This is the anti-barney frank. It means no recreation of the housing bubble or economic collapse brought on by barney frank.
I am trying to understand this. The banks are willing to give me a loan (i.e. low interest rate), but they want to be sure that there is no fraud on my part and that I can pay back the loan. OK. From the title it appeared that there is a paradox. More..