Now that the housing market has collapsed, the credit requirements to buy a home have become so strict that even extremely qualified buyers are getting turned down for mortgage loans.
Despite a good credit score, a six-figure income and an ample down payment, Dr. Komarovskaya, a recent dental school graduate, could not get a loan. Her mortgage broker told her she ran afoul of new rules requiring two years of sufficient tax returns from some home buyers, instead of only one.
"Everyone says this is a buyer's market, but they wouldn't let me buy," said Dr. Komarovskaya, 30. "It's not fair."
Not fair, perhaps, but far from unique, brokers and agents say. The readiness of banks to sell foreclosed properties has led to rising home sales in some areas. But the traditional housing market, the one that involves willing buyers and sellers, is still dead, with transactions lower than they have been for decades.
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The credit pendulum is stuck at 'stupid,'" said Lou S. Barnes, an owner of Boulder West Financial Services, a Colorado mortgage bank. "I am turning down loans every day that my grandfather in his Ponca City, Okla., savings and loan in 1935 would have been happy to make. And he was tough."
The denials are occurring for a wide array of reasons: the buyers' incomes are adequate but irregular; they are self-employed and take many deductions, reducing the taxable income on which lenders focus; their credit scores are below the cut-off point, which has been raised drastically; their down payments are less than 20 percent.
The current situation is frustrating for potential home buyers and bankers alike. The bankers are having to pass up good business because the rules for mortgage lending have become overly strict. The years of easy loans are over. But the economy is never going to get jump started until banks begin making sensible loans again.
