- Hewlett-Packard Earnings Rise, Match Guidance
- HP Comes in As Expected; Is It Time to Buy?
- Cramer: What Monday’s Housing Number Really Means
- Why the Dollar Will Likely Stay Weak for Some Time
- Wall Street 'Bonuses' Disappear—but Only in Name
- Bear, Lehman Execs Weren't Wiped Out by Crisis: Study
- How Real Estate Investors Skew Housing's Reality
- Vioxx Showed Risk Signs Before Being Pulled: Report
- Group Asks Huntsman to Cease Operations in Iran
- Can Murdoch Help Bing Challenge Google and Shift the Content Equation?
- HP's Mark Hurd
- HP Comes in As Expected; Is It Time to Buy?
- 9 Stocks That Play Rising Water Costs: Strategists
- Weis' Deal Likely Won't Change Big Money Contracts
- Gold Prices Can Double in 3 Years: Portfolio Manager
- Nov. 23: Unusual Volume Leaders
- Help Wanted—Please Run $4 Billion University
- Apple Comes to AT&T's Rescue
MOST SHARED
- The 'Real' Jobless Rate: 17.5% Of Workers Are Unemployed
- Paul: Audit the Fed
- Wave of Debt Payments Facing US Government
- Existing-Home Sales Jump To Highest Level in 2-1/2 Years
- HP Comes in As Expected; Is It Time to Buy?
- Buffett's Wealth and Fame Hasn't Helped 'Warren' As a Name
- Hewlett-Packard Profit Rises, Matches Guidance
- Holiday Travel Outlook
- Nov. 23: Unusual Volume Leaders
- Madoff—The Holiday Drink
Text Size 
BOSTON — Inna Komarovskaya was ready to do her part to revive the economy: She found a “really cute” condo to buy.
Despite a good credit score, a six-figure income and an ample down payment, Dr. Komarovskaya, a recent dental school graduate, could not get a loan. Her mortgage broker told her she ran afoul of new rules requiring two years of sufficient tax returns from some home buyers, instead of only one.
 |
“Everyone says this is a buyer’s market, but they wouldn’t let me buy,” said Dr. Komarovskaya, 30. “It’s not fair.”
Not fair, perhaps, but far from unique, brokers and agents say. The readiness of banks to sell foreclosed properties has led to rising home sales in some areas. But the traditional housing market, the one that involves willing buyers and sellers, is still dead, with transactions lower than they have been for decades.
The recession is the major reason sales are dragging, of course, but it is not the only one. As Dr. Komarovskaya found, buyers once viewed as perfectly qualified are being denied mortgages.
Brokers and bankers say that in past decades, the credit markets would almost certainly have accommodated many of these people.
“The credit pendulum is stuck at ‘stupid,’” said Lou S. Barnes, an owner of Boulder West Financial Services, a Colorado mortgage bank. “I am turning down loans every day that my grandfather in his Ponca City, Okla., savings and loan in 1935 would have been happy to make. And he was tough.”
 |
The denials are occurring for a wide array of reasons: the buyers’ incomes are adequate but irregular; they are self-employed and take many deductions, reducing the taxable income on which lenders focus; their credit scores are below the cut-off point, which has been raised drastically; their down payments are less than 20 percent.
Housing usually leads the country into a recession, which certainly happened this time, and also leads it out — which will not happen in 2010, the real estate industry contends, without stronger efforts to thaw the market.
No one is advocating a return to the lax lending standards of 2006, when buyers with no income or documentation could get loans. But many people say they believe lenders and the government, in correcting the excesses of that era, have gone too far in the other direction.
Fannie Mae, the government-controlled company that buys mortgages, is so dominant in the lending market that its rules set the standard. It recently toughened its policies, saying it would count only 70 percent of the value of stocks and mutual funds when calculating a buyer’s assets. Previously, that figure was 100 percent.
A Fannie spokesman, Brian Faith, said tighter regulations screened out those unprepared to be owners.
“One of the important lessons learned in the past few years is that it is not enough to help a borrower own a home,” Mr. Faith said. “We must also help ensure that they will be able to stay in the home over the long term.”
Mortgage brokers say those who are being rejected for loans are often entrepreneurs who are used to taking risks. “They are chomping at the bit to get into this market, but are forced to the sidelines,” said Stuart Fraass of Guaranteed Rate. “If you’re self-employed, you have virtually no chance of getting a mortgage now.”
Mr. Fraass was unable to help Raghbir Singh, a real estate investor who owns a gas station in Dover, N.H. Mr. Singh tried to buy a $301,000 house for himself and his family with 10 percent down and excellent credit, but was rejected. “It was unfair,” Mr. Singh said. “I’m a good risk, but I’m forced to rent.”
Print
Email
- The show attracts a big TV audience every year, but this year it may take on even more importance.
- …you'll want to be prepared. Tips for getting the most out of the post-Thanksgiving shopping frenzy.
- Congressman Ron Paul explains to Squawk Box why he’s pushing legislation to audit the Federal Reserve.
- CNBC’s Phil LeBeau took a test drive of GM’s flagship electric car. Here’s what he thought of the Volt.
- The energy company Power Efficiency is building tools that regulate the power electric motors use.
- CNBC’s technology reporter Jim Goldman guides you through the best gadgets to buy this holiday season.
Data is a real-time snapshot *Data is delayed at least 15 minutes