Mortgage underwriting standards have become "excessively tight" and the Federal Housing Administration and GSEs need to "reassess and amend their policies," according to the National Association of Realtors.
NAR's board of directors is calling on not just the mortgage banking community but regulators, asking them to seek ways to increase the availability of credit to a broader range of qualified home buyers, including first-time home buyers, and low- and moderate-income families.
"Many qualified borrowers are finding it hard to obtain a mortgage without extremely high credit scores," according to a newly issued NAR Credit Policy.
The policy paper notes that Freddie Mac purchases almost no loans with a loan-to-value ratio of more than 80% if the borrower has a FICO score of less than 700. And approximately 60% of the loans purchased by Freddie have LTV ratios at or below 80% and a FICO score of more than 750.
No numbers were available on Fannie Mae's purchases and FICOs as National Mortgage News went to press.
Easing these tight underwriting standards will "not only help individual, well-qualified potential borrowers, but also the entire housing market which currently suffers from an excess supply of housing," NAR says.
