Mortgage Application Denied by a Large Bank? Try a Smaller Lender

As large banks adapt to new regulations, they are less likely to work with low income borrowers and those with minor credit issues. Small lenders are filling this vacuum.

As large lenders face increased scrutiny by regulators, they are much more reluctant to extend mortgages to low income borrowers and those with dings on their credit reports. In fact, Realtor Magazine reports industry experts anticipate mortgage originations will be down 12 percent in 2014 from the preceding year, even though mortgages rate are holding at historically low levels. The reason for the large banks low risk tolerance is to avoid repurchase demands from Fannie Mae and Freddie Mac, which act as guarantors for the majority of mortgages.

Smaller Lenders Approve Applications Large Lenders Deny

If your mortgage application has been denied by a large bank, applying for home financing from a smaller lender may be the answer to a home loan. Since smaller banks and private lenders tend not to face as much regulatory scrutiny as the “too big to fail” banks do, they are more flexible in their lending criteria than large banks. In fact, Marketwatch reports that mortgage originations from smaller lenders increased by 10 percent during the four year period 2008 to 2012. The best way to connect with a small lender who is likely to approve your mortgage application, contact a local independent mortgage broker.