In a regular, quarterly questionnaire, the Federal Reserve asks the nation's banks whether "prime" residential mortgage guidelines had tightened over the last 3 months.

The most recent survey holds some good news for homeowners.

Since May, just one-fifth of the Fed's responding banks said mortgage guidelines had tightened.  This number is dramatically less than last quarter's results when the survey posted a 50 percent figure.

It's just one more sign that banks are warming to the economy and that may portend the end of the recession.  Although, to be fair, banks "not getting tighter" is definitely different from banks getting looser.

Don't expect banks to lift the last two years' restrictions just yet.

Since guidelines started tightening in earnest circa-2007, borrowers face a plethora of new hurdles:

• Minimum FICO scores are higher by 120 points at minimum
• Home buyers need larger downpayments and/or equity percentages to qualify
• Debt-to-income ratios must be lower
• Employment tenure must be longer
• Banks demand more assets in reserves, including retirement funds

Additionally, getting a second mortgages over 80 percent is a challenge.

As mortgage guidelines go, in some respects, so goes the housing market.  As more Americans pass muster with underwriters, the larger the potential Homebuyers Pool -- a positive for housing -- and the Eligible-For-Low-Rate-Refi Pool -- a positive for the economy.

A lot of analysts believe credit tightening started the U.S. recession in 2007.  It seems only natural, therefore, that credit loosening could help end it.

(Post adopted from Bring the Blog)

Dan Green is an active loan officer. Email or call 513-443-2020. Dan is on Twitter at @mortgagereports.