Since the 2008 housing crash, most lenders have refused to give loans to borrowers with minor imperfections on their applications, but that is starting to change. This year, at least 15 smaller lenders have begun offering slightly riskier mortgages that are not government-backed and may come with higher interest rates or require bigger down payments. The mortgages are held on balance sheets or sold to investment funds, given the slow recovery in the securitization market. "Some lenders became afraid of their own shadows," says RPM Mortgage Inc. CEO Rob Hirt, whose company in August began lending to borrowers who have higher debt burdens or had sold a home for less than what they owed on the mortgage. "The market is beginning to realize that if you make smart and sound loans to people who don't fit in the narrow box, it doesn't make them a worse risk." The Mortgage Bankers Association says credit availability has loosened by 4.7 percent this year, but credit remains nearly 90 percent tighter than during the housing bubble.
From "You Don't Need to Be Perfect to Get a U.S. Loan Anymore"
Bloomberg (10/13/14) Shenn, Jody; Leondis, Alexis
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