mortgage banks – can reduce the need for credit score?

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I heard that mortgage lenders, credit-score requirements below a certain point next week. Is this true? You will now have a requirement for your guests to 700 with 5% to qualify, or 680 with 10% to qualify: as an example. I heard the fall, the credit rating a bit, so that more can get mortgages. Has anyone heard?

  1. Reply
    Rick B
    May 3, 2011 at 4:57 am

    With subprimes crashing, I would think they would be RAISING requirements, not LOWERING them.

  2. Reply
    V C
    May 3, 2011 at 5:39 am

    I have not heard this but it does seem a little inconsistent with what I have been hearing, that is that cos. are more squeamish to lend because of all the sub-prime failures that are starting to happen now. It is possible that they will lend to lower credit scores with a higher down payment.

  3. Reply
    May 3, 2011 at 5:47 am

    I have not heard this and it would make no sense even if I had.

    With the sub-prime mortgage lenders failing like they are, if anything I would think that all lenders would by raising their standards not lowering them.

    I mean think about it, we have only seen the tip of the iceberg with this, there are thousands of arm’s out there that have not adjusted yet and the housing market is still in the tank.

  4. Reply
    steve g
    May 3, 2011 at 6:20 am

    Think of it this way. If the banks lower their FICO scores, then they will be increasing their risk and putting their stock holders and other investors at risk. Banks are very, very, risk avoidance institutions, and with what has been happening, the likeliness of this happening is between nil and none.

  5. Reply
    May 3, 2011 at 6:46 am

    Don’t believe too much on advertisement. Some brokerage are advertising still for jumbo loan 100% – then you will read from the news paper the contradiction. So, who’s right?

    Money is harsh not only to small businesses – but to the lenders too. This :Loan Officers that thinking that there are still people out there that are going to buy – have not estimated the real number – I am a loan officer, after I was mauled by some kids because they are now homeless because of the kind of loan this loan officer sold to their parents without really telling them that after 5 years they won’t be able to pay their mortgage no matter how much they cry – it’s just impossible- I realized bad loan officer has done big damaged to the lending industry plus the reputation of good and honest loan officers.

    There are people who can’t buy a house even though they have 800 score because there’s no money to loan them. It is very expensive to buy a loan these days. Lenders are also drying and that’s why some close it’s door.

  6. Reply
    Go, I
    May 3, 2011 at 6:54 am

    I heard just the opposite….with foreclosure rates skyrocketing every day, I believe they will be increasing the minimum requirements in order to get a home loan.
    When the housing market is this bad, lowering the loan stipulations will only wind new loan seekers into the same pile of crap that everyone else is in now.

  7. Reply
    May 3, 2011 at 7:47 am

    If you found a company stating something like that I would be very suspecious…. Mortgage companies are in trouble right now and it’s harder to get loans then before and it’s only going to get worse before it gets better.

  8. Reply
    May 3, 2011 at 8:00 am

    It depends on the type of mortgage you are applying for. FMNA only requires 5% down if you get approved. If your FICO score is above 640 you should not have a problem getting approved, as long as the DTI is below 45% and you can provide you income, assets and have no collection or bad rent history. FHA loans only require 3% down and FICO score needs to be above 620 and the same required as above. If you can’t provide income or assets you will need ALT-A program. Your FICO score will be a key factor in getting your mortgage.

    Remember to get quotes from at less three loan officers and have them pull your credit. Having your credit pulled 3 times will have little to no affect on FICO score.

    1st choice your local bank
    2nd choice referral by Realtor
    3rd local or Internet mortgage broker

    Compare apples to apples, fixed loans to fixed loans.
    It is Federal Law that they must give you a Good Faith Estimate and Truth In Lending statement within 3 day of the application. Look at the APR on the TIL, and go with the lower APR. APR is the true rate.

    The Loan Officer will use your FICO score to charge you a higher rate or charge you more fees.

  9. Reply
    May 3, 2011 at 8:33 am

    Quite to the contrary. Our database tracks loan programs, rates and requirements from lenders around the country (for the past four years) — subprime to prime– and while there are still loans available at both ends of the spectrum, what we’ve been seeing recently is:

    a. Larger downpayment requirements and stronger income verification requirements for subprime loans (usually 640 middle FICO scores and below). In other words, those stated income/stated asset 100% subprime loans are virtually gone.

    b. Fewer programs at lower credit score levels, though there are still subprime loans and lenders available.

    c. Significantly fewer programs in Alt-A (the loans between prime and subprime)

    What you may have heard is the talk about FHA Secure and other programs designed to help borrowers with decent credit but bad loans. Those loan programs can offer more flexibility with regard to the scores, but your recent credit history should not include lates.

    If anything, overall loans are more score sensitive than ever, and I strongly encourage you to get your three bureau FICO scores if you are at all concerned about your credit and ability to qualify. Most lenders will use the middle of your three FICO scores to qualify you. The myFICO program offers a score simulator so you may be able to identify things you can do to boost your score a bit. A few points can move you into a different program.

    Now, what we don’t see happening is a disappearance of loans for credit qualified borrowers. There are issues in jumbo loans but your typical good credit/good property/documented income loans are still there. And lenders are hungry to make those types of loans to help make up for some of the losses on the other ones. The mortgage market has not completely dried up as we may be led to believe by the headlines.

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