The screw tightens: Home loans tougher to get

Recently released government data for 2011 from the Home Mortgage Disclosure Act (HMDA) showed just how tight mortgage credit has been.

Incomes of prospective purchasers have increased since 2004, but the loan-to-income ratio has declined.

The median household income for a homebuyer using conventional financing rose from $79,000 in 2007 to $ 90,000 by 2011, while the national median household income has remained flat since 2007 at about $50,000.

This indicates that either (1) more loan applicants with higher incomes were applying and those with lower incomes were self-selecting themselves out of the process, and/or (2) that lender income standards had become more stringent.

The new data revealed that as median home buyer income rose, credit financing became even tighter.

If financial institutions returned to normal underwriting requirements, National Association of Realtors estimates that an additional 10 to 15 percent residential homes would be sold, resulting in the creation of approximately 300,000 new jobs.

NAR members have cited local and regional banks as well as credit unions as good places to look for a mortgage.