By Julie Schmit, USA TODAY
Home buyers such as Bob and Janet Zych have fueled the U.S. housing market for decades.
They have excellent credit with scores that top 800, lifelong careers, and investment portfolios that have set them up for a comfortable retirement, they say.
But this year, “after faxing a ream of paper” about their finances, they got so fed up applying for a home loan that they simply wrote a check for their new $85,000 vacation condo in Phoenix.
Trying to get a loan “was just a nightmare,” says Bob Zych, 65, a manager for Mohawk Industries in Omaha.
Following the greatest housing crash since the Great Depression, home lending standards have tightened to their strictest levels in decades, economists say. And people such as the Zychs and others nationwide are paying the price.
Tight home-loan credit is affecting everything from home sales to household finances. Many borrowers are struggling to qualify for loans to buy homes. Others can’t take advantage of some of the lowest interest rates in 50 years because they don’t have enough equity in their homes to refinance. Those who can get loans need higher credit scores and bigger down payments than they would have in recent years. They face more demands to prove their incomes, verify assets, show steady employment, and explain things such as new credit cards and small bank account deposits.
Even then, they may not qualify for the lowest interest rates.
The NATIONAL ASSOCIATION OF REALTORS® says lending standards are too tight and are hurting the housing industry’s recovery.
The lending industry counters that standards are where they need to be, given still-falling home prices and the shaky economy.
“It used to be anybody with a pulse could get a home loan. Now you have to be an Olympic athlete,” says Guy Cecala, of Inside Mortgage Finance.
“The pendulum has swung too far.”
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