The pendulum has swung the other way. Banks have been blamed for being too lax in their lending practices in the past, haven given mortgages to millions that couldn’t afford them and contributing to the foreclosure debacle. Now, they are being cited as being too restrictive. Their conservative approach, critics say, is hampering the housing market from finding some stable ground, as willing buyers are being denied a mortgage.
As the Wall Street Journal writes today, over 1 in 4 mortgage loan applicants do not get approved. This statistic is based on data from the 10 largest mortgage lenders across the country.
In all, the nation’s 10 largest mortgage lenders denied 26.8% of loan applications in 2010, an increase from 23.5% in 2009, according to an analysis by The Wall Street Journal of mortgage data filed with banking regulators.
The mortgage data…included loan applications filed by consumers who wanted to refinance existing mortgages as well as those planning to buy a home. Among home-purchase applications, lenders denied 19.9% of applications, up from 18.2% in the previous year, while 27.2% of refinance applications were denied, up from 24.4%.
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