Replies to post #308997 on Option Millionaires

[uranium-pinto-beans]

Urban Institute researchers believe more than 1 million mortgages could have been offered in 2015 if more balanced lending conditions prevailed
Just how strict is mortgage lending?
Maybe even stricter than you think. In fact, lending standards may have become so tight that many lower-credit borrowers are dropping out of the mortgage market.
Earlier this month, researchers at the Urban Institute's Housing Finance Policy Center published a research note explaining that finding from some of their research. Drawing on data from the Home Mortgage Disclosure Act, they found that lower-credit applicants accounted for only 33% of all applicants in 2015. That compares to 62% in 2006, at the height of the bubble, and 50% in 2000, when market conditions were generally considered balanced.
It's also worth reviewing some of the Urban researcher's earlier analysis about mortgage approvals and denials. Traditionally, denial rates have been a simple calculation: the number of denials divided by all applications. But the presence of the most pristine borrowers, who would never be denied, skewed that calculation, Urban argued. Subtracting those borrowers, they came up with what they call a "real denial rate."
It's important to note that Urban's definition of the most creditworthy borrowers doesn't just consider credit scores. The applicants they removed from consideration had FICO scores greater than 700, a loan to value ratio of less than 78%, and a debt-to-income ratio of less than 30%. They were also applying for non-risky loans.
With a more realistic pool of applicants from which to gauge denial rates, the past decade and a half looks a little more realistic. Urban's "real" denial rate, shown here in red, shows how denials plunged during the go-go years of mortgage mania, but then started to tighten a bit after the housing downturn began, even before the financial crisis hit.
It also shows that denials have trended down a bit in the past couple of years -- a "small improvement," according to Urban's research note. But as Laurie Goodman , co-director of the Housing Finance Policy Center, told MarketWatch, "the credit box is still too tight."
Goodman sees the decline in lower-credit applicants as clearly problematic, and symptomatic of an overly-tight mortgage market, although it's not clear whether would-be applicants are holding back because they are aware they may not qualify, or for some other reason, such as not having enough money for a down payment or losing interest in homeownership.
Earlier Urban analysis suggested that tight lending meant that 1.1 million mortgages that would have been made in 2001 were "killed" -- never written -- in 2015.