Applying for a mortgage loan gets trickier

Here’s a case of solving a problem only after it’s escalated out of control.

According to a Reuters story by writer Lisa Baertlein, which you can see here on Realtor.org, a growing number of mortgage lenders are making it more difficult for borrowers to get home loans if they can afford a down payment of less than $20,000.

This is in response, of course, to the mortgage-lending crisis. During the housing boom, lenders were willing to give out mortgage loans to borrowers with shaky credit histories, low incomes and high levels of debt. Not only that, they often gave loans to borrowers who came up with no dollars at all for a down payment, or who did not want to provide paperwork documenting their employment and salary histories.

To say that lenders had become overly lenient is an understatement.

Tightening lending requirements now is a good step, though, of course, it comes far too late. It’s like buying a fire alarm after your house has burnt to the ground.

This should come as no surprise to those who’ve studied the real estate industry. Mortgage professionals have long been reactionary. They rarely anticipate problems, and rarely do anything to stem trouble before it arrives.