 |
| Long Beach housing inventory/end of 2012 |
Although much is being said about the housing recovery, the fact is that mortgage loans are much tougher to get than in years past.
- It's just recently come out that some lenders are loosening up the requirement for equity (30% or more) for owners wanting to keep their current homes, but then, a lot of property owners just getting into the market didn't know about that rule in the first place. It's one of the many things making it difficult for people to move on, because even if they otherwise qualify for a new mortgage, their property doesn't.
- Another issue is FICO scores. Higher than ever scores are being demanded of the "average" buyer and this has impacted the market to the extent that, per Laurie Maggiano of the U.S. Treasury's Homeowner Preservation Office, between 2007 and 2012, new home purchases dropped 30% for those with a FICO score over 780. In that same period of time, new home sales dropped 90% for borrowers with a FICO score between 620 and 680. "Where are these folks supposed to live?" asked Maggiano. (At one time, a FICO score of 700 or higher was considered very good for a borrower.)
- And then again, specific lenders have their own overlay of loan requirements. Fannie Mae and Freddie Mac may accept FICO credit scores as low as 620, and FHA will approve
applications with scores as low as 580, yet investors for the loans may require FICOs at least 60 points
