Mortgage Loans Increasingly Difficult to Acquire
RENEE MONTAGNE, host:
The latest scare in the markets was set off by worries that Countrywide Financial, the largest U.S. mortgage lender, could face bankruptcy if it gets even harder for this big lender to get credit. And it's getting harder for everyone to get home loans because lenders are seeing their own lines of credit drying up.
And they're getting choosier about who they hand out loans to, as NPR's Scott Horsley reports.
SCOTT HORSLEY: Spooked by rising defaults on risky home loans made in the last few years, lenders are clamping down. A survey by the Federal Reserve finds that's especially true when it comes to borrowers with shaky credit, and those who want mortgages with no down payment, for example, or little proof of income.
Christian Weller has been studying the tightening mortgage market at the Center for American Progress, a Washington think tank. He worries poor and minority borrowers will be among those hardest hit.
Mr. CHRISTIAN WELLER (Center for American Progress): The problem with credit crunches is always that it prohibits people to invest in their future. And part of the problem is always that a period of over-lending, as we saw in the last few years, is often followed by an over-tightening in the market.
HORSLEY: Borrowers in high-cost housing markets like California, they also have more trouble qualifying for the size of loans they need.
San Diego mortgage broker Joseph Bennett(ph) says 30 year fixed rate loans are still available though for credit-worthy borrowers who can afford to make a down payment.
Mr. JOSEPH BENNETT (Mortgage Broker): People with the good credit are in very good shape. Unfortunately, they're not the one's that are looking right now.
HORSLEY: Some of the biggest casualties of the credit squeeze are homeowners who already have adjustable mortgages than recounting on refinancing before their monthly payment shot up. Some of those borrowers may no longer qualify for a new mortgage, especially if they bought at the peak of the market and now find they owe more than their homes are worth.
Scoot Horsley, NPR News.
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.