“The people being left out right now are those whose credit scores are average,” said Julia Gordon, a director at the Center for American Progress. “It’s just your typical American family with a credit score in the high 600s or low 700s.”
"....the banks are wary of taking on risk and are skittish about exposing
themselves to litigation related to any questionable mortgages. "
Ring a bell! This is the impact of all the government litigation against the commercial banks including the recent huge settlements with JP Morgan.
This story is straight from the front page of the business section of this morning's NY Times.
Since the government is penalizing banks who made loans to homeowners of average credit, banks are no longer making loans to such people.
"Much is riding on the appetite of large banks to make mortgages, both
for the broader economic recovery and for Americans looking to own a
home — long considered a way of obtaining a firm financial foothold.
The results .... reflect a deep timidity that persists
among the banks, which have focused their lending almost exclusively on
borrowers with pristine credit."
This is the predictable outcome of the government's war on the banks. Obama has succeeded. Only the one percenters can get loans in the Obama world. Forget it, if you are a member of the American middle class. Those looking for a strong economic recovery and job creation can forget it as well.