by Nancy Osborne, COO of ERATE®
July 24, 2008 - Credit conditions have progressively worsened throughout this economic downturn. Lenders have been increasing the minimum credit scores required for many types of loans and have raised the minimum loan-to-value requirements (or LTV) for a variety of mortgages. Many mortgage loans being underwritten in today's lending climate necessitate that a borrower must have a higher equity position in their home if refinancing or must make a larger down payment contribution at the time of purchase. As a result of this shift in the credit markets and the subsequent tightening of lending standards, consumers have been left in the position of having to charge many new purchases on their credit cards. Consumer loans are primarily unsecured and do not include loans secured by assets such as real estate. Demand for non-revolving credit used to finance consumer purchases such as autos and vacations has recently fallen to its slowest pace since December whereas revolving credit, a category which includes credit card use, increased by over 7% during the same period. Consumer credit is increasing at an annual rate of over 3.5% while total consumer debt is 1 billion higher than many analysts expected and has hit levels topping 2.5 trillion.
Nancy Osborne has had experience in the mortgage business for over 20 years and is a founder of both ERATE, where she is currently the COO and Progressive Capital Funding, where she served as President. She has held real estate licenses in several states and has received both the national Certified Mortgage Consultant and Certified Residential Mortgage Specialist designations. Ms. Osborne is also a primary contributing writer and content developer for ERATE.
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