Home Buyers Feel the Squeeze - Lenders Embody Kindness

Mortgage lending standards are getting stricter and homebuyers are feeling the squeeze. Lenders are requiring higher FICO scores and more documentation from home buyers.

Securing a Loan Gets Tougher As Lenders Tighten Standards – Mortgage lenders are beginning to scrutinize borrowers more closely, causing some loan applicants, even those with good credit, to face higher costs and more hassles.

As the number of delinquent mortgages climbs, lenders have tightened their standards for issuing loans, including such well-publicized moves as raising minimum credit scores and cutting back on 100% financing and low-documentation loans. Now, some lenders are probing more intently would-be borrowers' finances. They are taking a tougher look at how much the property a borrower wants to buy is worth. They are peering further into clients' pasts for credit problems and requiring more in-depth reviews of borrowers who say they are self-employed. Some lenders are taking a harder stance when it comes to whose credit score a couple can use when applying for a mortgage, rather than simply allowing them to use the higher of the two scores.

If you can believe the press, compassionate lenders are coming out of their cubicles to help homeowners that are in trouble with their mortgages.

A kinder, gentler mortgage lender - More lenders are reaching out to borrowers in trouble. With foreclosures on the rise, banks are trying a gentler touch.

When homeowners default, they cost lenders pots of money, an average of $40,000 or more per home - due to brokerage fees, utility bills and other costs. Banks find they're better off getting borrowers back on the payment track than forcing them out.

So, it appears that those in trouble get a repreive while those hoping to get a home get the ruler on the knuckles.