Sales of foreclosed properties are driving home sales in some areas.

But mortgage lending rules have tightened to the point that qualified buyers are being turned away in droves.

“The credit pendulum is stuck at ‘stupid,’” said Lou S. Barnes, an owner of

Boulder West Financial Services, a Colorado mortgage bank.

“I am turning down loans every day that my grandfather in his Ponca City, Okla., savings and loan in 1935 would have been happy to make,” Barnes told The New York Times. “And he was tough.”

Mortgage loan denials, analysts say, are occurring for several reasons.

First, Fannie Mae dominates the lending market to the extent that its rules set lending standards. And recently, Fannie toughened its policies, reducing the amount of value of a borrower’s stocks and bonds to 70 percent when figuring the borrower’s assets.

Previously, Fannie Mae calculated these at 100 percent.

Secondly, banks now want down payments of at least 20 percent.

Thirdly, the credit score required to obtain a home mortgage has been drastically raised, blocking those with income adequate to pay the loan but who have a few problems in their credit history.

Finally, the self-employed, including medical and dental professionals, often take so many deductions that their taxable income doesn’t meet the new standards.

Chris George, president of CMG Mortgage, predicted that no-docs and other non-traditional 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,” George told the Market Ticker.