One element contributing to tightened credit requirements is lenders’ reluctance to originate loans sold to your enterprises that are government-sponsoredGSEs) Fannie Mae and Freddie Mac.

One element contributing to tightened credit requirements is lenders’ reluctance to originate loans sold to your enterprises that are government-sponsoredGSEs) Fannie Mae and Freddie Mac.

Is Credit Too Tight?

Because loan providers have tightened their credit requirements, they may not be serving an important wide range of low-risk prospective borrowers. Borrowers with less-than-pristine documentation and credit are struggling to have mortgages. Scientists during the Urban Institute estimate that if loan providers had used the exact same credit requirements that were utilized in 2001 — before the loosening of criteria from the housing crisis — they might have granted yet another 5.2 million mortgages between 2009 and 2014. 11 They discover that between 2001 and 2014, the true amount of borrowers with FICO scores above 700 reduced by 7.5 %, the quantity with ratings between 660 and 700 declined by 30 %, and also the quantity with ratings less than 660 reduced by 77 per cent. 12

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