johnnymk

http://www.njbiz.com/daily.asp?eDate...&tzid=92#73238

The good news: mortgage rates are down and applications for refinancings are up. The bad news: it's much harder to qualify for a refinanced loan these days.

What's more, the borrowers who need to refinance the most - because their adjustable rate mortgages (ARMs) are resetting to higher interest rates - are among those having the most trouble winning approvals.

"I'm turning away about 60% to 75% of the clients who come to me for a refi," said Bob Moulton, president of Americana Mortgage Group on Long Island, N.Y. "Some don't have enough equity and others have bad credit scores."

During the boom years, lenders approved most anyone with a pulse. Not so today. Mortgage brokers recognize this and are now being very selective about the clients whose applications they choose to submit to the likes of Wells Fargo or Bank of America.

If an applicant has poor credit, or a home whose value is rapidly deteriorating, they're just not going to bother.

"If the person is Sweet Polly Purebread -- good income, good assets, high credit score -- there's money out there," said Moulton. "But if not, then it's harder."

Interest rates are way down - 5.67% is the going rate for a a 30-year fixed loan this week, according to Freddie Mac - which in turn has generated a spike in refinancing applications.

Total mortgage applications were up 73% last week compared with the same period 12 months ago, according to the Mortgage Bankers Association (MBA), and 69%of those applications were from borrowers seeking to refinance. Last February, when interest rates were about 6.3%, about 46% of applications were for refis. CNNMoney.com

zippyjuan

If they had done this say five years ago then housing and its associated financing markets would not be having any of the problems they are today. Unfortunately the mortgage companies wanted to capture as many loans as they could- not caring about the quality but the quantity. Now they are paying. Or should pay.

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Maarchk

Yeah its kind of an ugly loop. Everyone took the money that was available and not that there isn't much money out there, its pretty much just a few select people able to get loans. I wonder how the lending market will recover since most of the money out there is tied up in devalued real estate so you can't really get it back. I heard people are buying mortgage pools at 10 cents on the dollar. Thats insane!

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guiseppewv

Very bad title to this article. Privileged few , ha! You do not have to be privileged to get a loan - you only need good credit. You can have lots of money and bad credit which will mean you do not get the loan. This was all brought about by the greed of a few and the ignorance of many. They should write and article titled "Bailouts: only for the privileged few" cuz I know I am not going to get one. People get the teaser rate (i.e. a lower rate than I got) b/c they are not wise enough to read the fine print and now they are going to get bailed out, refinanced for free, and get the same rate or better than I have.

Daedalus

I understand your frustration, but I wouldn't get too bent out of shape. Anyone who bought in the past 2-3 years with even 90% LTV probably cannot refi today or under any proposed plan. To start, the appraisal process is getting a lot of scrutiny. Some cities/zip codes have even been identified by the PMI Mortgage Insurace company as *requiring* at least a 90% LTV before insurance will be sold (effective in March). If you don't have 10% down, you can't get PMI, and thus you won't get a loan. They're late to the game though, as most lenders have adopted similar policies already. Next time a realtor says "Category 5", they're probably not talking about a hurricane.

Nija

I grew up thinking you had to have a 10% down payment, minimum. 20% is preferred.

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