Mortgage Credit Standards Much Too Tight?

By now you’ve heard the stories and seen the evidence yourself: mortgage credit standards are much too tight. Over the past year a handful of jumbo lenders and brokers have told me about applicants who could not verify all their income, but had plenty of money in the bank to cover the payments. What happened to these applicants? Answer: they didn’t get the loan. Meanwhile on Wednesday morning, the National Association of Realtors reported that 16% of its members reported a contract cancellation in June, up from 4% in May. NAR said tighter credit standards appear to be the culprit. Will continued strained credit give birth to a whole new industry of nonprime lenders? I know of at least two veteran mortgage bankers who are trying to raise money for such a venture. Stay tuned…