Tip - If you've only talked to one lender, talk to another or two.

Again, this is National mortgage news and might not effect us here. I did not personally take a survey of local lenders, but if local Columbus Mortgage lenders are willing to loosen their mortgage requirements, it could bode for a great Spring.

If the unfreezing of credit is paramount to an economic rebound, the first signs of a thaw may have reached Central Ohio.

Monday, the Federal Reserve released its quarterly survey of 84 member banks.  In it, the Fed says that fewer than half of its responding banks tightened “prime” mortgage guidelines over the last 3 months.

This is good news for active Franklin County home buyers who want a mortgage.

The word “Prime” is a vague term with respect to home loans, but it usually refers to mortgage applicants who can document:

• Equity or downpayment in a home 
• Credit scores over 740
• Excessive income versus debt

In looking at the Fed’s survey, one could infer that because less than 50% of banks made credit less available, more than 50% did not.  Borrowing may not be easier for prime borrowers, in other words, but it’s not harder, either.  Count this as a small victory for the housing market. 

All of this said, however, guidelines remain restrictive. 

In the 12-month period beginning late-2007, banks continuously clamped down on low credit scores, low downpayments, and high debt-to-income levels.  In addition, Fannie Mae added new fees based specific loan traits and second mortgages practically vanished from the marketplace.

The cumulative outcome of these actions precludes many Americans from participating in the current Refi Boom.  However, if the trend reported by the Fed continues, lending may open up a bit later this year, providing a boost to housing and to the economy.

If so called “Experts” believe that the tightening of credit helped create this recession. The loosening of credit, therefore, may be the way out.