Qualified 'niche' borrowers frozen out

With the bailout of Fannie Mae and Freddie Mac and the reluctance of banks to issue new mortgages, nearly 90 percent of all new home loans are now either funded or guaranteed by taxpayers. And the standards embraced by the government have resulted in some prospective "niche" borrowers -- who would have gotten loans in past years even under strict standards -- being frozen out of the market, The Washington Post reported Monday.

"People say, 'Well that's good because of lots of people who got loans in the past shouldn't have gotten those loans at all,'" Keith Gumbinger of HSH Associates, told the Post. "But there were tiny niche markets for whom those products were originally intended, and those people who legitimately need them now won't get them."

The now-vanished products include subprime mortgages, which were originally intended to help out people with spotty credit until they could get another loan, and no-money-down mortgages, meant for wealthy borrowers who wanted to buy a home without having to liquidate their investments, the Post said.

Copyright 2009 by United Press International.