Mortgage Lenders Deny 1 in 3 Applications

October 1, 2009

By Angie Moreschi:

It wasn’t just your imagination. It’s been tough going to get a new mortgage or refinance, according to a new Federal Reserve report. Lenders made it harder for borrowers by tightening up qualifications, despite billions in taxpayer bail-out dollars that were supposed to loosen up lending.

The Federal Reserve report shows nearly one in three borrowers who applied for a mortgage last year was denied.  In the annual report on mortgage practices among the nation’s lending institutions, the Fed says the denial rate for all home loans was about 32 percent last year — about the same as in 2007, but up from 29 percent in 2006.

The denial rates for Blacks and Hispanics were more than twice as high as the rate for white borrowers.

The report highlights massive changes in the lending industry after the housing market bust. Overall loan applications were down by a third from a year earlier, and were half the level in 2006.

The data, collected from nearly 8,400 lenders, is required under the Home Mortgage Disclosure Act of 1975.

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