Saturday, February 12, 2011

FICOs and FHA: 2 big lenders loosen up

With no fanfare or public announcements, two of the largest FHA-approved lenders have backed off their controversial "overlay" requirements on FICO scores (lender overlays are qualification requirements that can be more stringent than FHA's own requirements).

Both Wells Fargo and Quicken Loans confirmed to me last week that they will now lend to applicants with 580 FICOs and 3.5 percent down payments.

Along with most other major lenders, both companies previously had insisted on minimum FICOs of 620 for otherwise qualified borrowers seeking 3.5 percent down payment loans. If your score came in even slightly lower, they wouldn't even look at your application.

An estimated one third of Americans now have FICO scores below 620, according to one consumer group's estimate.

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