Recent reports have indicated that Fannie Mae, who has adopted stricter mortgage lending practices, has prompted other mortgage lenders to do the same so as to avoid another housing market collapse that comes, in part, from homeowners being unable to afford their home loan payments. It may seem like common sense, but these new practices are emphasizing safer loans, some of which are longer in term and have fixed rates, and are asking mortgage lenders to review a borrower’s history and credit more throughly before lending.
Obviously, risky home loans created a massive problem as many agencies and companies simply wanted to get rich quick and offered home loan opportunities to individuals who could not afford to make their home loan payment or even qualify for a home loan to begin with. It’s hoped that these tighter lending practices will be adopted and used in the housing market in the future, which could cut down on the number of homeowners who obtain a mortgage but cannot afford to pay off their loan or are not in the financial position to even own a home.
While there are those who believe that these kinds of practices may cause trouble and slow housing recovery, there are those who would argue that more responsible standards on the part of mortgage lenders can have nothing but positive effects on the housing market and economy.
Despite mixed feelings on tighter mortgage lending practices, there are many who feel that by making homes available to only those who have the ability and responsibility to meet the demands of homeownership, the housing market will fare better in the long run. While, obviously, there are those who argue that individuals who may have a less than desirable credit history or rating may be deemed as risky, but can still make their monthly home loan payment, many feel that erring on the side of caution will be more beneficial.