Bank attitudes toward risky lending is making it very difficult for the self-employed, even those with high incomes, to secure mortgages.

No-doc loans are particularly hard to get, locking out people whose incomes are derived from investments or who are able to tax-shelter significant dollars.

The California Mortgage Bankers Association spokesman Dustin Hobbs says the industry understands that banning most alternative financing isn’t the long-term answer.

"It's a reaction to the current environment," he says. "There's such a lack of appetite for risk right now in general that any product viewed as having any sort of risk at all has a tough hill to climb."

Chris George, president of CMG Mortgage, predicts that no-docs and other nontraditional loans will be back within the next six months as lenders gain confidence. "As with injuries, as with your credit, as with the economy, time heals all wounds," he says.

Source: The San Francisco Chronicle, James Temple (07/09/2009)