According to an article in the Dallas Morning News, many banks are making it more difficult for potential homeowners and those who want to refinance to borrow.
The article said:
The Fed’s new quarterly survey found that about 50 percent of U.S. banks tightened their lending standards on prime mortgages, up from about 45 percent in the survey issued in early February.
Meanwhile, 65 percent of banks said they tightened standards on nontraditional mortgages, such as adjustable-rate loans with multiple payment options. That was up from 50 percent in the last survey.
As lenders take a battering from the foreclosure crisis, many are choosing to lend cautiously. Unfortunately, this may leave many borrowers facing foreclosure or resetting interest rates with few options if they want to refinance or sell their home. There is anecdotal evidence that the slogging housing market is partly caused by potential home buyers being denied loans even when their credit is good. For those who don’t need to sell their home, they can just wait it out. But those homeowners who are facing foreclosure and need to sell, are being adversely affected by the banks’ reluctance to lend money. The irony of the banking industries belated caution is that it may actually be pushing some homeowners into foreclosure by denying potential buyers loans.