Overly-cautious lenders, stingy with mortgage money are mostly to blame for the slow housing recovery, at least that’s what the National Association of Realtors is saying in a recent magazine article.

“Sensible lending standards would permit 500,000 to 700,000 additional home sales in the coming year,” said NAR Chief Economist Lawrence Yun.  “The economic activity created through these additional home sales would add 250,000 to 350,000 jobs in related trades and services almost immediately, and without a cost impact.”

The NAR argues that mortgage lenders are excluding a good portion of prospective buyers by focusing so heavily on credit scores. The Realtors Confidence Index survey found that in August, 53 percent of all loans were made to borrowers with excellent credit, those with scores above 740. That’s up from the period of 2001 to 2004, when between 41 and 43 percent of home loan recipients had credit scores that high.

“These findings show we need to return to the sound underwriting standards that existed before the aberrations of the housing boom and bust cycle, and thoroughly re-examine current and impending regulatory rules that may cause excessively tight standards,” Yun said.

However, lenders are naturally more cautious these days after the financial heartache that followed the housing bust in 2007. While there may be cause to ease up somewhat on their lending standards compared to several years ago, lenders are still gun shy about taking on much risk when it comes to mortgages.

The NAR obviously feels, however, that lenders need to open the mortgage spigots a bit more.

“There is an unnecessarily high level of risk aversion among mortgage lenders and regulators, although many are sitting on large volumes of cash which could go a long way toward speeding our economic recovery. A loosening of the overly restrictive lending standards is very much in order,” Yun added.