The Los Angeles Times
More can afford a home, but lenders remain tight-fisted
Nearly half of all California households can now afford the median-priced home in the state –
but that’s no help if they can’t get mortgages.
Making sense of the story
- Six years after the subprime mortgage meltdown, banks remain tight-fisted, even with
solid borrowers – a fact they attribute to shifts in government regulation and demands
that they buy back bad loans.
- Mortgage credit has not eased much since 2007, according to Federal Reserve surveys
of loan officers, even while low rates and the housing recovery have borrowers lined up
- First-time buyers and self-employed borrowers must jump through especially complex
hoops. Even gold-plated applicants must justify the smallest quirks in their finances in
excruciating detail. And, processing applications can take months.
- Lenders say their cautions stems in part from uncertainty over a tougher new regulatory
environment, along with unrelenting demands from government-sponsored mortgage
buyers that the banks repurchase soured loans.
- Salaried professionals with credit scores in the high 700s have the best shot at being
approved for a mortgage loan in this environment, along with borrowers who have never
missed a payment and want to refinance.
- However, even these borrowers may face stiff documentation demands, including having
to explain any bank deposit other than a regular paycheck.