Government efforts to make lenders refund customers over faulty mortgages may be preventing record low interest rates and slowing home sales as banks tighten their requirements for lending and scrutinize borrowers in order to avoid further payouts, Bloomberg News reported.
Lenders such as Quicken Loans and Vision Mortgage Capital are issuing mortgages only to those with very higher credit scores and are asking for more documents than required by the Federal Housing Administration and government-backed Fannie Mae and Freddie Mac.
“You’ve got to take measures now to protect yourself,” said John Johnson, CEO of Alabama- based MortgageAmerica. “I fear that [the market] will face a much longer recovery because of this.”
Mortgage rates as low as 3.94 percent are failing to revive the housing market, Bloomberg said. Sales of existing homes fell 3 percent last month, according to data from the National Association of Realtors. [Bloomberg]