Credit has been loosening faster for the wealthiest Americans, since bigger loans are mostly put on bank balance sheets instead of packaged into securities that get sold to investors. Applications for jumbo mortgages of at least $729,000 increased 59 percent in the first four months from a year earlier. Loans of less than $150,000, fell by 2.1 percent, according to the MBA.
President Barack Obama’s administration has been pushing to expand homeownership opportunities as families rebuilding from the recession face some of the tightest underwriting standards. The president last month introduced new housing reforms targeted at middle-class communities.
Borrowers with foreclosures or bankruptcies resulting from a job or income loss can now finance a home purchase with an FHA mortgage as long as they demonstrate 12 months of timely payments, complete housing counseling and otherwise qualify. The FHA, a government mortgage insurer, previously required a three- year wait.
More than 7 million houses have been sold for a loss or lost to foreclosure since 2007, according to RealtyTrac.
“The reaction post-bust was a bit extreme but we’re returning to more prudent underwriting standards,” said Erin Lantz, director of mortgages at Seattle-based Zillow Inc.