Jan 09, 2012
Fed governor: Tight underwriting puts up too many obstacles
09 Jan 2012
Posted by Andrew Kantor
Echoing oh-so-many others who have pointed this out, Federal Reserve Board Governor Elizabeth Duke, speaking right here in Richmond, said that the pendulum of mortgage underwriting standards has swung too far in the other direction.
Now, she said, lenders are being too strict with their standards, and that’s slowing the housing recovery.
“Some of this tightening is appropriate, as mortgage lending standards were lax, at best, in the years before the peak in house prices,” she said. “However, the extraordinarily tight standards that currently prevail reflect, in part, new obstacles that inhibit lending even to creditworthy borrowers.”