You know, you have to wonder what lenders (particularly sub-prime lenders) were thinking. They loaned billions (perhaps more) of dollars to people who were never going to be able to make (or want to make) the payments, and then they were shocked when those same borrowers defaulted. It’s kind of like the old business myth of “Yeah, we’re selling it for less than it cost us to make it, but we’re going to make it up in volume.” I guess it didn’t work in the lending business either.
The net-net of all this is that mortgage companies, concerned about increased oversight from boards of directors, stockholders, government agencies, etc., are tightening up the requirements to get a loan. It’s likely the days of no down payment loans, loans with payments in excess of your ability to pay (based on a percentage of your income) etc, are going, going, gone (especially for those with marginal credit ratings.)
There is a report in MSN money on how lenders are responding to this lending crisis and as it affects us all, it’s worth the read. To get the full story, click here.
0 Responses to “Mortgage Industry to Tighten Loan Requirements”