Official: Loan Criteria Too Tight Now

Official: Loan criteria too tight now

Complaining that even many credit-worthy borrowers can no longer qualify for
mortgages, the president of the California Association of Mortgage Brokers on

Thursday called for exceptions to underwriting criteria that tightened in response to skyrocketing foreclosures. The lending industry should create "sensible alternative loan
products" that, for instance, would allow people with good credit but
nontraditional income to buy homes, Fred Arnold said at a news conference.

Among those who would benefit, he said, are firefighters who regularly work
overtime and teachers with second jobs. Under today's underwriting criteria,
he said, lenders frequently won't consider such supplementary income.

"We are hoping the secondary market comes back," Arnold said. He said
it is needed to support mortgages that do not meet the increasingly stringent
criteria adopted by Fannie Mae and Freddie Mac, the government-sponsored
enterprises that today buy or guarantee many of the nation's mortgages.

Arnold said he is not advocating a return to the ultraliberal lending practices
of a couple of years ago . But he said the continued tightening of underwriting
requirements is excessive because falling home prices have taken much of the
risk out of the mortgage market.

"These corrections they are making should have been made a year or two
ago," Arnold said in an interview. "The people buying today are
qualified buyers with good credit and good debt-to-income ratios and they are
finding it extremely difficult to get financing."

Brad German, spokesman for Freddie Mac, said it makes sense that the agency has
become more careful about the loans it will purchase from lenders.

"This is one of the weakest credit markets in a decade," he said.
"Obviously underwriting standards and credit requirements are going to
tighten."

So, there you have it. The government is only making things more difficult
which is creating a void that the Home Seller Assist program can fill and you
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Charles Cupoli 803-551-0039