The Wall Street Journal never disappoints when it comes to their investigative journalism.

According to a real estate article published earlier this week, self employed workers are increasingly being turned down for mortgage loans due to the tightening credit markets.  Never mind that many self employed people are among the most qualified borrowers on the planet.

I’m not talking about some guy pulling $40,000 per year on a part time consulting contract or even part time blogger raking in a few Adsense bucks, I’m talking about the uber-smart professionals known for making serious bank.

Who among the self employed are being turned down?

Only some of the most professional and affluent members of the working community.

1. Small business owners.
2. Doctors with their own private practice.
3. Accountants branching out from typical corporate paperwork.
4. Lawyers who don’t enjoy working 90 hours a week in a major law firm.
5. Independent equity traders (I assume my job title qualifies).

These are careers that were (still are in my opinion) considered the upper crust of the professional and self made professional world.

What I find disheartening, aside from young professionals who can’t qualify for a mortgage, are the potential tremors this has among the major lending institutions.  If they are afraid to lend money to working professionals who obviously have the intelligence and personal drive get to this point in their career, they are probably among the most worthy beneficiaries of cheap credit.

I’ve included an exercpt below of one such potential borrower who was rejected upon applying for a mortgage loan:

Hubert Noguera, a 38-year-old medical-device engineer who also owns a small business, is one of them. He can’t get approved for a loan, even though he has a strong 800 credit score and is prepared to make a 40% down payment on a house near San Francisco in the $800,000-to-$900,000 range. Mr. Noguera says he has assets worth three times the $500,000 loan he’s requesting and is in the process of selling his share of a recently inherited residence in Saratoga, Calif., worth $1.1 million.

Banks have turned down the loan because the amount he’s requesting appears high relative to the portion of his income that he can fully document — and they won’t consider his other income, says his mortgage broker, Connie Madrid.

“My blood type is O positive. What else do they want?” Mr. Noguera recalls asking Ms. Madrid

I can’t say that I’m 100% shocked because I knew the lending market would tighten up, but in this case, if I had an excess 500k sitting around I might try to locate Mr. Noguera and loan him the money myself at a 6% interest rate.  He seems like the picture perfect example of a prime loan candidate, yet, without complete verification and validation of his full income, he’s being turned away.

This story also hits close to home because I have a few friends just exiting medical school (who are readers of this blog) and could potentially run into similar issues if — or when — they decide to setup their own private practice.  You know it’s a tough credit market when a fresh out of medical school physician can’t qualify for a mortgage just because she started her own practice in a rural community rather than working in a city hospital.

On a more personal note, this story from the WSJ actually reminded me of a story my grandfather used to tell me growing up.  In Genesis, the Bible tells of a story where Joseph interprets a dream for Pharaoh saying:  there will be 7 fat years followed by 7 lean years.  Meaning that the years of excess (e.g. cheap credit and easy money) will be followed by years of hardship.

I guess 2008 was the beginning of the lean years.

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