Recently, I came across a study from The Pew Charitable Trusts that asked a question I think the mortgage industry needs to talk about:
Have we made it too hard for qualified people to get a mortgage?
After the 2008 housing crash, lending standards needed to change. There were loans being made that never should have been approved.
So we tightened everything.
But almost two decades later, the pendulum may have swung too far.
A Good Borrower Doesn’t Always Look Perfect on Paper
Today’s mortgage system puts a lot of weight on credit scores, documented income and traditional employment.
That works well for some borrowers.
But what about the business owner whose tax returns don’t tell the full story? The freelancer with inconsistent monthly income? Or someone who had a financial setback years ago but is in a completely different position today?
Pew found that borrowers with moderate credit scores have seen their access to mortgages drop dramatically since 2000.
At the same time, the mortgage market today carries significantly less risk than it did before the financial crisis.
Kenny’s Take
I’ve been doing mortgages for more than 20 years, and one thing I’ve learned is that not fitting inside the traditional lending box doesn’t automatically make someone a bad borrower.
That’s exactly why options like bank statement loans and other non-QM programs matter.
I’m not saying we should go back to the lending standards that helped create 2008. Absolutely not.
But there’s a big difference between responsible lending and making the box so small that financially capable people can’t get through it.
The Bottom Line
The goal shouldn’t be to approve everyone.
It should be to get better at identifying who can actually afford the loan, even when their finances don’t look traditional.
Maybe the next evolution of mortgages isn’t about making lending easier.
Maybe it’s about making it smarter.
Every situation is different. Let’s find the right strategy for yours. Reach out and let’s talk.
