Thankfully, Americans are finding mortgages more difficult to get – ForeclosureConnections

Thankfully, Americans are finding mortgages more difficult to get ForeclosureConnections

And at least a 620 credit rating must generally be provided

Analysts are generally speaking in agreement with Washington's claim that much of the blame for America's foreclosure crisis should be fairly and squarely laid at the feet of risk lenders. At the height of the real estate boom purchasing a home on credit was pretty much the same as buying an automobile on extended payments short on cash .. bad credit record .. no problem, we will make a plan.

Banks and other mortgage lenders with excess cash brushed aside time-honored hold points like credit reference checks, employment letters and proofs of income in their scramble to lure gullible clients while the mid-2000 bubble lasted at their lowest point they were helping buyers with ratings as low as 560 points buy homes without exacting deposits, and with payments they had not a hope in Hades of affording. They sandbagged their offerings with adjustable interest rates, unfair conditions and unethical prepayment penalties, and then had the nerve to peddle them as safe investments that they assuredly were not.

The vast majority of these dubious offerings were built to fail leading to America's foreclosure crisis that saw many erstwhile lender clients lose their collateral as they were dispossessed of their redemption rights.

Thankfully, these Wild West days are gone for now and hopefully for ever, as America's Treasury Department digs deeper in the mire to determine which companies like Goldman Sachs are to be held accountable.

To take a case in point, a typical victim was given to believe her loan was interest only and equating to payments of just $1,291 a month in truth it was a fixed rate mortgage that demanded over half her income. She managed for while, then hit hard times and ten months later is still hoping for a modification to her loan she can afford.

These days lenders are required to ensure that payments don't equate to more than 25% to 33% of monthly income. They also have to bypass liar's loans by insisting on complete documentation, few will take a risk on a credit score below 620 points and all require deposits with cash still in reserve

Some analysts with their feet still on the ground allude to risky loans still being taken, some to first time borrowers protected by Federal Housing Office. This is not to say that the FHA is not improving on its act these days they require a credit rating of at least 620, plus a 3.5% own money deposit.

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