Mortgage lenders and new "redlining"

The nation's home loan companies have been battling deteriorating housing market conditions for some time now and that has caused severe losses for many of them. Property values are dropping in several areas and borrowers in these markets increasingly face the threat of foreclosure as their exotic ARMs reset higher and make payments unmanageable. Times are tough on both sides of the fence, to say the least.

In an effort to stem the bleeding, mortgage lenders have instituted a bunch of new policies, one of which has drawn pretty heavy criticism from consumer advocacy groups and some in the lending industry itself. They call it new "redlining". It all started when Fannie Mae in December announced that from mid-January on it would require an extra 5% down payment from loans originated in declining areas. To read the entire article, please click on the link in this paragraph.