NEW FHS CREDIT SCORE REQUIREMENTS
By Tony Stevenson, SWBC
We wanted to provide you with important information regarding changes to the minimum FHA credit score requirements.
On Friday, Bank of America announced that effective with case numbers assigned on and after October 4, 2010, their minimum credit score floor for an FHA loan will be increased from 620 to 640. Since this change is based on case number assignment date, it is CRITICAL that the case number assignment dates be entered in Mortgage Builder as soon as possible. This will help us manage our risk exposure for credit scores less than 640 and help us monitor salability of these loans.
It is important to note that other investors have already implemented higher credit score requirements for FHA loans:
- Chase – minimum credit score floor of 640
- CitiMortgage – minimum credit score floor of 640
- SunTrust – minimum credit score floor of 660
In addition, we have received word that Wells Fargo will be moving to a 640 minimum credit score as well. No official announcement has been made yet, but we are told it will come quickly. We will notify you of the details as soon as we have them.
At this moment, U.S. Bank and Franklin American offer standard FHA loans with credit scores as low as 620 (640 for streamline refinances). SWBC Mortgage company policy requires that we have two investors for every loan. Therefore, loans with credit scores between 620 and 640 MUST be eligible for sale to both U.S. Bank and Franklin American. It is IMPERATIVE that the loan meet both investors’ guidelines.
U.S. Bank and Franklin American will NOT want to be adversely selected as the lenders of choice for lower credit score borrowers. Therefore, we expect that they will make changes to their minimum credit score floor as well. IMPORTANT FOR YOU – As soon as one of these investors makes the change, SWBC will no longer offer FHA loans with credit scores less than 640 since we will no longer have two investors to support credit scores less than 640.
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