Home mortgage hurdles hurt the market For many responsible borrowers, credit is still out of reach

The financial crash of 2008 took the housing market down with it, especially here in the Northeast. As a Realtor and president of the National Association of Realtors in 2011, I witnessed the lingering effects up close. In 2011, home sales in the Northeast plummeted to their lowest level since 1984, which was less than half of all homes sold in 2007.

Though the market has recovered as job growth and home equity have risen, the housing market in the Northeast has not fully returned to the healthy level before the housing boom. One reason is that challenges still remain for many qualified buyers seeking financing. Too often, policies restricting credit create unnecessary costs and hurdles for people who otherwise could afford a mortgage.

It is no surprise that regulators tightened restrictions in response to the lax standards that existed before the financial crisis. However, the pendulum has swung too far in the other direction, leading to the situation facing prospective buyers today.

In addition to financing restrictions, buyers also face low inventory levels, investor competition, rising prices and high mortgage insurance premiums. That’s tough enough, but when combined with tight credit policy, an environment emerges that can make obtaining a mortgage difficult for even the most qualified buyers.

To help, the Federal Housing Administration and government-sponsored enterprises Fannie Mae and Freddie Mac are tasked with injecting mortgage liquidity into the marketplace to help qualified buyers. That includes middle- and low-income families as well as people purchasing homes for the first time. The mission of FHA and the GSEs, however, is being hampered by needlessly high fees and credit restrictions. Thankfully, there are some responsible fixes that can put us back on track. READ MORE