Catch-22 in the housing market
Washington is abuzz with the arguments about foreclosures and whether banks have been steamrollering them through, but many Americans at the other end of the spectrum are having their own problems with mortgage lenders.
One of the couples featured in our special report on how hard it is to get a mortgage were originally turned down because the top right-hand corner of a paystub appeared torn in a photocopy. This despite the fact that the applicants’ debt was just 14 percent of their income and they were borrowing just 25 percent of the home’s value.
Others with credit scores over 800 — on a scale that only goes up to 850 — found themselves jumping through hoops to satisfy onerous demands from their lenders.
Before the housing market crashed, even industry insiders ridiculed certain popular mortgages as “NINJas” — “no income, no job loans,” so the tighter standards are not surprising. Banks argue they have a duty to be responsible lenders and many people would agree. The trouble is, the harder it is for people to get a loan or refinance, the slower the recovery in the housing market will be. Sounds like a Catch-22.
If you’re looking to refinance any time soon, you may want to check out this advice from Lynn Adler. And do tell us about your experiences, good or bad.
The uproar in Washington over foreclosures has left another chunk of the population in limbo — those looking for a good deal by buying a foreclosed property. Personal finance columnist Linda Stern has advice for them too.