Lenders continue to reject borrowers with otherwise good credit when they diverge from the standard approval checklist.
Would-be borrowers facing the most problems include the self-employed.
One reason bankers are so nervous are the standards held out by Fannie Mae and Freddie Mac. Not only are Fannie and Freddie demanding credit scores above 720, they are refusing to buy back defaults when the original mortgage application had small discrepancies from the norm. To avoid losses, lenders are being extra careful.
The result is that some borrowers are being rejected for problems that seem completely inconsequential.
Source: The Wall Street Journal, James R. Hagerty and Nick Timiraos (07/10/10)
An increasing number of home owners in foreclosure continue to live in their homes, mostly ignoring the foreclosure action and refusing to pay anything.
The average borrower in foreclosure is unlikely to be evicted for 438 days, says LPS Applied Analytics. LPS says more than 650,000 households haven’t paid their mortgage in 18 months, and in the case of 19 percent of those households, the lender hasn’t made any effort to repossess the property.
In some states like California and Texas, lenders can foreclose without a say-so from the courts. In those states, the action is likely to be quick. But in 19 states, including Florida and New York, the court must approve the foreclosure and resulting eviction and the process is slow.
Source: The New York Times, David Streitfeld (05/31/2010)