Self-employed may still struggle to find financing

When banks tightened their lending standards, they also made it more difficult for self-employed workers and independent contractors to find financing for their relocations to a new home.

That's because many of those workers relied on nonprime mortgages, which traditionally required fewer proof of income requirements. That was an essential caveat for homebuyers who were paid erratically or could not provide a reliable proof of their income. However, lenders' tighter requirements have since made it far more difficult for these buyers to find banks willing to make nonprime mortgages, and loan experts say those standards will only get tighter.

In a survey of loan officers by the Federal Reserve, a large portion - 62 percent - said they do not envision loan standards for nonprime mortgages to loosen in the forseeable future. Comparatively, nearly half as many - 34 percent - said prime mortgage standards would remain tight into the near future. The disparity could mean that moving to a new home could continue to be a difficult task for self-employed workers.

At the same time, some banks have promised that they are aware of these concerns, and are performing more diligent reviews of mortgage applications from borrowers who might have stable income but can't produce reliable documentation, reported the Wall Street Journal.
 

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