FHA continues to ask lenders for lower credit score buyers and Wells Fargo says no way!
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additional comments on "Wells Snubs New FHA Credit Scores"
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Brian you are right. Subprime was never as bad as the new FHA guidelines. I have a portfolio lender who will do really low scores, they have no minimum score, but they require 30 or 40% down payment, and really high interest rates. Now that makes sense. If someone has a 500 credit score there is a reason, even 580 for that matter. Educate these folks, get their scores up and then give them home loans.
Brian you are right. Subprime was never as bad as the new FHA guidelines. I have a portfolio lender who will do really low scores, they have no minimum score, but they require 30 or 40% down payment, and really high interest rates. Now that makes sense. If someone has a 500 credit score there is a reason, even 580 for that matter. Educate these folks, get their scores up and then give them home loans.
Absolutely love watching your videos. You are my go to guys for all news about Real Estate.
Absolutely love watching your videos. You are my go to guys for all news about Real Estate.
FYI No relation to Brian Sullivan
FYI No relation to Brian Sullivan
…And the EMMY AWARD for "Best Ever Frank and Brian Show" goes to– Frank and Brian for their show on" FHA Scores Drop Below the Poverty Line at 500!" The New York Times said: "Best show that hit the nail on the FHA!:. The Fairfield Republican (or whatever): "Our boys did us proud on this one!"
500 credit score…I can't say it without laughing!
…And the EMMY AWARD for "Best Ever Frank and Brian Show" goes to– Frank and Brian for their show on" FHA Scores Drop Below the Poverty Line at 500!" The New York Times said: "Best show that hit the nail on the FHA!:. The Fairfield Republican (or whatever): "Our boys did us proud on this one!"
500 credit score…I can't say it without laughing!
Guys they are a lot of other reasons for a low score besides someone who just doesn't pay their bills. Divorces caused a lot of partners to take it out on the other one. I have a female borrower right now that makes almost 6 figures a year, through the divorce the husband was awarded the home and he is not making the payments on time just to mess with her as he is bitter that she left him. This is not uncommon in divorces to see spouse take it out on the other one. Of course there are lot's of people that just do not pay as well.
Guys they are a lot of other reasons for a low score besides someone who just doesn't pay their bills. Divorces caused a lot of partners to take it out on the other one. I have a female borrower right now that makes almost 6 figures a year, through the divorce the husband was awarded the home and he is not making the payments on time just to mess with her as he is bitter that she left him. This is not uncommon in divorces to see spouse take it out on the other one. Of course there are lot's of people that just do not pay as well.
It's called – speaking out of both sides of your mouth. Typical of government trying to appease the people. I guess history has never taught us anything.
It's called – speaking out of both sides of your mouth. Typical of government trying to appease the people. I guess history has never taught us anything.
Its all about risk layering. If the scores go down then the reserves, job time, etc must go up. FHA should never be the subprime loan for the home buyer. We have Buyers and Renters that separation will always be there.
Its all about risk layering. If the scores go down then the reserves, job time, etc must go up. FHA should never be the subprime loan for the home buyer. We have Buyers and Renters that separation will always be there.
under 580 credit score requires 10% down …….the lenders doing this require it to be their own money …so with skin in the game ..I do not think this is a bad idea…not the same as doing 100% loans on a 580 credit score…….The 50% DTI I feel is more for self employed borrowers who write off plenty that cannot be added back into their income….I have self employed clients right now that have 800 credit scores that I am struggling with getting their DTI below 50% that have over 100000 down and the ltv is 67%…How is this not a good loan??…I think the word "common sense" needs to be put back in our business and lives ….As frankly Ladies and Gentleman ….IT IS GONE!!!….Their are too many people that look at a checklist and go …yes or no…and have no training or common sense….either it is in the box or not…have a great day!!
under 580 credit score requires 10% down …….the lenders doing this require it to be their own money …so with skin in the game ..I do not think this is a bad idea…not the same as doing 100% loans on a 580 credit score…….The 50% DTI I feel is more for self employed borrowers who write off plenty that cannot be added back into their income….I have self employed clients right now that have 800 credit scores that I am struggling with getting their DTI below 50% that have over 100000 down and the ltv is 67%…How is this not a good loan??…I think the word "common sense" needs to be put back in our business and lives ….As frankly Ladies and Gentleman ….IT IS GONE!!!….Their are too many people that look at a checklist and go …yes or no…and have no training or common sense….either it is in the box or not…have a great day!!
I agree with Dennis. Common sense and logical thinking are gone and the Corporate dopes that run the lending companies love it.
I agree with Dennis. Common sense and logical thinking are gone and the Corporate dopes that run the lending companies love it.
FHA has always been the sub prime loan of choice. The recent reduction in minimum score is reflective of a loss of market share due to the increased FHA MIP structure. Why would you put someone in an FHA loan when they will qualify for FNMA/FHLMC 97% with a much lower payment?
FHA has always been the sub prime loan of choice. The recent reduction in minimum score is reflective of a loss of market share due to the increased FHA MIP structure. Why would you put someone in an FHA loan when they will qualify for FNMA/FHLMC 97% with a much lower payment?
you are 100% correct – Government sponsored foreclosures. The government is seeing if big banks will be stupid to take the bait again like they did during Clintons years and Clinton forcing Fannie and Freddie to do his will with Barney Franks’s boyfriend holding the reigns of Fannie as their CEO. Sorry but the banks have taking it big time in the purse and it will be a long time before they trust Uncle Sam again….
guys where you been? FHA has been doing loans down to 500 credit scores for a long time…this is NOT new. Perhaps the ratios are an additional requirement, but credit requirement has been there for quite some time. BTW, the only banks that allow down to 500 are make a FORTUNE off of these loans. They charge 2% over the norm.
guys where you been? FHA has been doing loans down to 500 credit scores for a long time…this is NOT new. Perhaps the ratios are an additional requirement, but credit requirement has been there for quite some time. BTW, the only banks that allow down to 500 are make a FORTUNE off of these loans. They charge 2% over the norm.
I agree with HUD… for all the reasons the previous smarty pants before me wrote… if someone has a 580 and they are paying 1500 in rent and the new mortgage is 1600 – let em' buy the house for cryin' out loud!!! I mean all other things considered, fico alone does not make a loan… and does not 100% define credit worthiness. I have seem many clients with a 590 Fico and lots of old lates etc. GREAT job stability and history of renting…. NO Bk's or Foreclosures just they are not educated on the importance of credit. We educate them, send them to homeownership classes and "By Golly" lend them the money – YAH people with bad credit !!!!!! keeps me in business.
I agree with HUD… for all the reasons the previous smarty pants before me wrote… if someone has a 580 and they are paying 1500 in rent and the new mortgage is 1600 – let em' buy the house for cryin' out loud!!! I mean all other things considered, fico alone does not make a loan… and does not 100% define credit worthiness. I have seem many clients with a 590 Fico and lots of old lates etc. GREAT job stability and history of renting…. NO Bk's or Foreclosures just they are not educated on the importance of credit. We educate them, send them to homeownership classes and "By Golly" lend them the money – YAH people with bad credit !!!!!! keeps me in business.
I have yet to see a FICO score make a mortgage payment…ever. Lower FICO score borrowers who do make mortgage payments are those with solid evidence to repay the loan (ATR REG) and equity or skin in the property. Yes, it's stupid to have tax payers back stop FHA loans with high LTVs and 500 or subprime FICO scores. The LTV is key to defaults. People have a hard time walking from a property with 25% equity or more…the imperial evidence is with every servicer. Angel Oak gets it!!
I have yet to see a FICO score make a mortgage payment…ever. Lower FICO score borrowers who do make mortgage payments are those with solid evidence to repay the loan (ATR REG) and equity or skin in the property. Yes, it's stupid to have tax payers back stop FHA loans with high LTVs and 500 or subprime FICO scores. The LTV is key to defaults. People have a hard time walking from a property with 25% equity or more…the imperial evidence is with every servicer. Angel Oak gets it!!
Look at what a LOT of peopel are paying for rentals….50 back end ratio for housing cost is not so bad when you look at it that way….and even struggling home ownership eventually does let people build equity and have SOMETHING for retirement…..what do you think they get when they are paying 50% of their income as RENT?
Look at what a LOT of peopel are paying for rentals….50 back end ratio for housing cost is not so bad when you look at it that way….and even struggling home ownership eventually does let people build equity and have SOMETHING for retirement…..what do you think they get when they are paying 50% of their income as RENT?
The comedian, Steven Wright, said it all for FHA. I'm having deja vu and amnesia at the same time.
The comedian, Steven Wright, said it all for FHA. I'm having deja vu and amnesia at the same time.
Lots of buffering today, especially 2nd half of program.
Lots of buffering today, especially 2nd half of program.
There was absolutely no buffering with my computer!
There was absolutely no buffering with my computer!
DTI at 50% or even 57% is helpful when their is a spouse who is less responsible
with their credit and therefor cannot be on the loan even though their income would help.
Also, it can counter the added debt from the non-borrowing spouse to the loan. As far as the credit scores mentioned with those ratios, that does seem problematic. However, companies willing to take on credit score borrowers below 580 FICO with 10% down or 580 to 619 with 3.5% down usually are pretty strict in the overall evalution. There are the various derogatories to consider and what has been done to make it look like those bad credit days are behind them? I had borrowers with 580 or so credit score with 29/41% or better DTI and solid job history who I still could not get qualified due to 1 late in 12 months. How they have been handling their credit in the past 12 months to 24 months becomes very important. I just do not think any lenders taking these added risks are going to lighten up on how tough they are in evaluating these borrowers. I even got a disapproval from Underwriting for clients putting down 10% with a good history of credit rebuilding, excellent earnings, and $250,000 in reserves… but rejected for 1 30 day late in the past 12 months. I learned my lesson after that…no U W is ever going to allow 1 30 day late for borrowers with fico scores below 620! some companies do, but my former company did not.