Mortgage availability has tightened sharply as lenders impose tougher income, credit-score and down-payment conditions and drop some loan types altogether, such as home-equity lines of credit, the Wall Street Journal reported. The economic shock from the coronavirus pandemic explains some of this credit crunch. But the economic factors have been exacerbated by policy decisions in Washington, D.C., industry officials say. As part of its March relief bill, Congress let homeowners suspend mortgage payments for up to a year but provided no way to pay for this, potentially saddling lenders with the burden. Meanwhile, federal regulators make it hard for loans where borrowers might seek forbearance to get the backing of Fannie Mae and Freddie Mac, which guarantee nearly half of residential mortgages. One indicator of the credit crunch is that the volume of mortgages being refinanced, which normally rises sharply when rates drop, is up only modestly since before the pandemic, according to Black Knight, a mortgage-data and technology firm. Another indicator is mortgage rates themselves: They are roughly a percentage point higher than they ordinarily would be given current Treasury-bond yields.
