The Nation’s Housing: Lending changes expand pool of potential buyers

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The Nation’s Housing: Lending changes expand pool of potential buyers

By Kenneth Harney
Washington Post Writers Group  •  Sunday December 7, 2014 12:54 AM

When buying a house, are you in the “No way I could possibly qualify” category? Not enough cash in the bank for a down payment or closing costs? Credit scores good but not great? So much deferred student loan debt that you assume any lender would slam the door?

Large numbers of Americans feel the same, in part because they read and hear that qualifying standards for mortgages are the strictest they have been in decades.

A study based on a statistical sample of potential homebuyers conducted earlier in the year by the mortgage company loanDepot found that almost 60 percent of people who say they want to buy a home aren’t pursuing it because they are convinced that their applications would be rejected. Three-quarters of them, however, concede that they haven’t checked lender requirements.

But changes are underway in the mortgage market that could give potential homebuyers a better shot at qualifying. Start with recent policy shifts at Fannie Mae and Freddie Mac, the two dominant mortgage investors. Last month, both companies announced procedural changes that should encourage lenders to be less fearful that the mortgages they approve would be subject to costly buyback demands if the loans become delinquent.

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