Are Lenders and Buyers Too Close to the Edge?

Today's loans were not available 15 years ago, and most were not available 5 years ago. The shift in the market has underlined the necessity of getting first-time buyers a way into homeownership. In the 1990's, a zero-down loan was very expensive and very difficult to qualify for and the few sources available were very restrictive. Now, it's a different story because lenders qualify a buyer on their FICO score, a kind of universal credit risk number which they feel is a very reliable indicator of risk. But are lenders taking too much risk? Trillions of dollars are riding on a single number, and while there is still an active, very active, real estate market, a more conservative spending profile, especially for younger adults, would only be a good thing. There will be a greater return on a real estate investment than there will be on a new SUV. Read Are lenders getting too lenient? - Apr. 22, 2005.