Why are home loans so hard to obtain?

Why the housing recovery is taking longer than it should!

We have reported in the past that home loans have become increasingly difficult to obtain.  One of the reasons for this is because of the very high credit score lenders are demanding consumers have in order to qualify for a home loan.  But, lenders are saying it’s Washington’s fault.

In a recent article in the San Diego Daily Transcript, many lenders said that pending consumer protection rules on mortgages, passed two years ago as part of the Dodd-Frank Act, could expose banks to penalties.  Another provision could raise the cost of selling mortgages into the bond market.

About 82 percent of the respondents to the Fed’s survey also said they were worried about aggressive policing by Fannie Mae and Freddie Mac, which own or guarantee almost two-thirds of home loans.  Minor underwriting errors on even seasoned loans and newer, less-risky products are triggering demands that lenders buy back mortgages they’ve sold to the government-sponsored entities.

In some cases it is easier to obtain a credit card (an unsecured loan) than it is to obtain a mortgage.  If the banks were to ease these guidelines, imagine how much faster the real estate recovery would be.

Bryan Devore

Prudential California Realty

(760) 908-3838

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