They have been dying for the past 2 years and are vanishing even more lately. Last year we saw banks going out of business right before loans were scheduled to close. Subprime loans disappeared last year. And now in the past 6 months I have watched banks reduce people’s credit lines to the amount they owe! Why are they doing this? They are trying to eliminate risk.
Loan Risks have Increased: According to KSL news, in a recent article, http://www.ksl.com/?nid=148&sid=6921232 FHA risk has increased 8 fold.
Relocation Industry is having new loan problems
Fanniemae has changed their policies to not allow trailing incomes. In the past, when a family relocated Fanniemae would recognize income from a spouse that didn’t have a job yet. Those rules are out the door now. The spouse has to have a job as well. In troubling times banks don’t want to rely on ‘hopefully, I will get a job.’ They want solid income. This makes it harder for families who are trying to relocate.
These changes affect more than 40% of the population
It is harder to get loans unless you have a down payment, a solid job, and FICOs above 660.
Is it a bad thing? Can this be a good thing?
In the short term people will not be able to have what they want immediately. In the short term there will be some pain. However, in the long term, buyers will be stronger. This eliminates future threats of housing bubbles, and the collapse of those bubbles. All in all, it requires us to step up to the plate and be prepared.
It is time to act now and take advantage of low rates, low prices, and the recession in order to buy a house.