One element contributing to tightened credit requirements is lenders’ reluctance to originate loans sold into the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac.

One element contributing to tightened credit requirements is lenders’ reluctance to originate loans sold into the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac.

Is Credit Too Tight?

Because loan providers have actually tightened their credit criteria, they’re not serving a number that is significant of possible borrowers. Borrowers with less-than-pristine documentation and credit are struggling to obtain mortgages. Scientists during the Urban Institute estimate that if loan providers had used the exact same credit requirements that were utilized in 2001 — before the loosening of criteria from the housing crisis — they might have given an extra 5.2 million mortgages between 2009 and 2014. 11 They realize that between 2001 and 2014, the wide range of borrowers with FICO ratings above 700 reduced by 7.5 per cent, the amount with ratings between 660 and 700 declined by 30 %, together with number with ratings less than 660 reduced by 77 %. 12

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