Banks Continue to Tighten Underwriting Guidelines

The Office of Comptroller of the Currency says that 40% of the nations largest banks tightened their underwriting standards for residential mortgages last year (2011 report) . Actually that is a little better than past years. The 2008 report showed that 56% of the banks tightened their guidelines..then in 2009 73% tightened and in 2010 the percentage was 59%.

But how tight is tight? The way I see this is that suppose a bench mark was 100...then 56% of the banks went down to 90...then the next year 73% went down to 80..then the next year 59% went down to 70...then last year 40% reduced to 60......

Of course I don't have all the data but at this rate how long will it take until the underwriting standards are down to 0 ? Where nobody does loans?

It is very difficult to get a mortgage unless your credit is stellar and the down payment is 20% or more. The exceptions are FHA and VA loans.

If you apply for a loan be patient and be prepared to answer at least 40 dumb questions.

Doug Jones
Mortgage Magic NMLS 286668