NEW YORK (Reuters) - Mortgage credit has become too tight as lenders reacted to the U.S. housing bust, but chances that those terms will ease soon are remote, William Emerson, chief executive officer of online lender Quicken Loans Inc., said on Thursday.
Tight credit has frustrated even the most credit-worthy borrowers this year as banks, burned by faulty loans they made, clamped down on underwriting guidelines. Some banks have made standards tougher than Fannie Mae and Freddie Mac -- whose programs fund most loans -- would require, Emerson noted.
"Anytime you go through a difficult cycle things always get tightened and they probably get tightened too far," Emerson said in an interview. "I would tell you we are probably there, we are probably tighter than we need to be."
He doubted others would see it his way, however, and Quicken is largely bound by underwriting guidelines set by the two U.S. mortgage funding giants. There probably will not be much loosening in credit for another 24 months, he said.
In the meantime, Quicken -- which will originate more than $25 billion in 2010 -- will focus on grabbing market share, he said. Website MortgageDaily.com said Quicken rose two spots to rank eighth in U.S. mortgage volume last quarter.
The online lender is still tiny relative to the major lenders like No 1. Wells Fargo & Company (WFC.N), which originated $101 billion in mortgages last quarter.
Many big banks have been unwilling to add employees this year as refinancing business boomed, creating backlogs and slowing the process, Emerson said. The online capabilities of Quicken allow it to be more "scalable," he said.
Overall customer satisfaction has declined as the time it takes to get a loan has lengthened, according to a J.D. Power and Associates survey on Thursday, which ranked Quicken No. 1.
(Editing by Kenneth Barry)