As reported in the Daily Real Estate News on Thursday, February 6, 2014.
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 (Feb. 6, 2014)
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