Wells Fargo has announced that it will accept lower credit scores for loans backed by the Federal Housing Administration.
“We have dropped our FICO minimum for FHA from 640 to 600,” says
Wells Fargo Executive Vice President Franklin Codel, adding that the
move is a way for the bank to start “opening up our credit box more.”
Codel says the bank is looking to expand mortgage-credit availability
now that it has significantly reduced its repurchase risk. Wells Fargo
was among several banks that had to pay millions to Fannie Mae and
Freddie Mac to resolve repurchase claims from loans that were bought by
the GSEs and then went sour during the housing bust.
Codel says that Wells Fargo also implemented the qualified mortgage underwriting requirements a month before the Jan. 10 deadline.
Codel says Wells Fargo was “monitoring the production flows” to
determine which loans would be rejected under the new QM rules. “We
found very, very few,” he adds.
Source: “Wells Fargo Lowers Credit Scores for FHA Loans,” National Mortgage News
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