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One in three mortgage loans applications were denied in 2010

Only two thirds of America could get a home loan

Obtaining financing is frequently cited as one of the most difficult obstacles in the modern real estate transaction and the numbers now show that it is not a problem with perception, rather a reality. The WSJ analysed the 10 largest mortgage originators’ data to reveal a national average of 27% of all mortgage applications in 2010 experiencing a denial. The denial rate is up nearly 15% in the last year alone and it is likely denials will increase in 2011.

We’ve spoken for years about the pendulum swinging away from the Barney Frank’s push for homeownership for all back in the day (that led to risky loans) to today’s reality of increasingly difficult lending for any and all applicants.

Only two in three Americans who applied for a mortgage last year were able to move forward, but the data does not make clear whether or not all of those actually made it to purchase without a last minute lending issue (another commonly cited obstacle in getting a deal done).

“Although lenders were expected to pull back from the freewheeling conditions that helped inflate the housing bubble, some economists argue they are now too conservative, and say that with the U.S. economy still wobbly, mortgages need to be easier to obtain for qualified borrowers, not harder,” the WSJ reports.

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Mississippi, Vermont & Texas have denial rates over 35%

In order of lowest denial rates to highest:

  • 19.9%   Minnesota
  • 20.3%   Virginia
  • 21.0%   South Dakota
  • 21.0%   Kansas
  • 21.1%   North Dakota
  • 21.6%   Iowa
  • 21.8%   Nebraska
  • 22.4%   Maryland
  • 22.8%   Colorado
  • 22.8%   District of Columbia
  • 23.0%   Wisconsin
  • 23.1%   North Carolina
  • 23.3%   Washington
  • 23.6%   California
  • 23.7%   Massachusetts
  • 23.8%   Alaska
  • 24.4%   Delaware
  • 25.1%   Missouri
  • 25.1%   Pennsylvania
  • 25.2%   Montana
  • 25.5%   Illinois
  • 26.0%   Connecticut
  • 26.4%   New Hampshire
  • 26.5%   Oregon
  • 26.6%   New Jersey
  • 26.8%   Wyoming
  • 27.2%   South Carolina
  • 27.4%   Arizona
  • 27.5%   Hawaii
  • 28.2%   Indiana
  • 29.0%   Idaho
  • 29.1%   Rhode Island
  • 29.2%   Nevada
  • 29.5%   Georgia
  • 29.8%   Maine
  • 29.9%   Tennessee
  • 30.0%   West Virginia
  • 31.1%   Kentucky
  • 31.6%   Michigan
  • 32.2%   Florida
  • 32.8%   Oklahoma
  • 33.0%   Arkansas
  • 33.1%   Alabama
  • 33.5%   Ohio
  • 33.7%   New Mexico
  • 34.1%   Louisiana
  • 34.8%   New York
  • 35.1%   Texas
  • 36.6%   Vermont
  • 38.9%   Mississippi

With a high national average, how is your state performing? How tight is lending where you are and what surprises are you seeing during the transaction regardless of approval? We invite you to share your thoughts in the comments below.

The American Genius is news, insights, tools, and inspiration for business owners and professionals. AG condenses information on technology, business, social media, startups, economics and more, so you don’t have to.

24 Comments

24 Comments

  1. Joe Loomer

    June 27, 2011 at 7:51 am

    The thing that kills me is the ones who are denied after being qualified and given a good faith estimate. Contracts falling through, appraisals coming in low, all part of the new reality in real estate. The silver lining is it's forcing agents to seriously do their legwork and not hand the entire financing aspect over to the lender. Good, tactful conversation can reveal a lot more about someone's ability to buy than just calling the originator buddy.

    Navy Chief, Navy Pride

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