Ease of Lending Standards Would Give A Surge To The Housing Market
According the Chief Economist with the National Association Of Realtors, Lawrence Yung, a change in the lending under writing policies would help more people afford homes.
According to Yung, current policies are, “limiting who can become home owners and setting the stage for possible highly unequal wealth distribution in five years, because who will be getting [home price] appreciation over the next five years? They’re limiting the number of people in the middle who can become home owners.”
Ben Bernanke, with the Federal Reserve Chairman announced a new plan, known as QE3, (for “quantitative easing 3, said these tight underwriting standards are in fact easing. “As house prices have begun to rise, as the economy has gotten a little stronger, lending standards have eased just a bit,” he said. “There have also been other changes which are useful. I note for example that the FHFA (Federal Housing Finance Agency) and the GSEs (Fannie and Freddie) have recently changed their policy on put-backs, so that banks will have more certainty under what conditions a mortgage will be put back to them if it defaults. So, there are a number of things in train that will make the mortgage market a little bit more open. That is one factor actually that could make our policy more effective, rather than less effective over time. If more people have access to more credit, more people will have access to the low rates we’re providing.”
The ease of lending standards in just one way the housing market would be able to recovery quickly. In Tucson, the lending standards and qualifications are tight. In the Tucson luxury home market many buyers are electing to pay cash for properties just to avoid the arduous process of borrowing money. Paying cash for property in our market is a great strategic move, sellers often discount the sales price to have a qualified buyer of this caliber.
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