Jeff Jaye, a mortgage broker in Northern California, used to rely on homeowners looking to refinance their loans for more than two-thirds of his business. Today, he rarely bothers with those applications because he knows most homeowners can't qualify for a new loan.Fannie Mae and Freddie Mac may or may not need a government bailout, but the turmoil surrounding the mortgage finance companies' decline has already meant four things for borrowers: higher interest rates, more fees and closing costs, bigger down payments and fewer loan choices.
Lenders who must satisfy the requirements of Fannie Mae and Freddie Mac -- the dominant buyers of U.S. mortgage debt -- are now demanding bank statements, big cash reserves and second appraisals before they approve a loan to refinance a home.
"The lenders are making it so difficult to qualify," said Jaye, who now mainly works with homebuyers snapping up foreclosed properties and homes selling for deep discounts. "I know everybody's scared right now, but It's just so over-the top."
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