To spout off that we live in an interesting atmosphere in the mortgage lending business is akin to the genius next door proclaiming professional wrestling isn't real. Yet, I shouldn't even get started on the latter. And the former is quite diplomatic in the use of the word "interesting" rather than downright perplexing.
Let's take for example the title of this post. I get inquiries daily from Realtors, folks reading posts here on AR, fellow tenants in the building we rent, William Shattner, and former clients about the difference in what is said that can be done and what is actually done.
"But there's no minimum credit score for FHA Loans," the informed consumer proclaims. Even so, try finding me a lender or bank who will legitamately close and fund an FHA loan with a score below 620 these days and I will find you an episode of Charles in Charge that is remotely interesting.
You'll find similar discrepancies with Fannie Mae Guidelines. One in particular, is how many mortgages on different properties that can be on credit before they will no longer lend you a dime. If my facts serve me well, Fannie's Guidelines now allow up to ten. However, few investors will even allow more than four.
(Of note, my opinion is if you open up the credit flood gates to quality Real Estate Investors, it will help curb what is wrong with the Housing Industry & the Economy... sooner rather than later. That though, is another post in and of itself)
What we are experiencing is called lender overlays. The guidelines say one thing, yet you come to find that lender's aren't abiding by that book of thinking. The guidelines may say this, but the lender or bank says that. Their pendulum is tending to swing a bit more conservative than the guidelines of Fannie, Freddie, or HUD for that matter. While I can't rationalize the pool of brain cells planting the seeds for this line of business dealings, these are the facts right now.
The rules being laid out by the so-called "Big Dogs" are being tweaked a bit by the smaller puppies who are lending the money.
This is an important reality to understand. Credit Reporting Agencies, Mortgage Insurance Companies, Ballet Classes involving Mario Lopez, & Lender Overlays are wagging the tail of the mortgage industry. It may not be fair. It may not be right. It may not be just. But this is the hand that's being dealt, learn how to play the cards.
And deal with somebody who knows how to hold them.
Sorry, my first Kenny Rodgers reference of all-time... I believe.
~Of note, this post isn't copyrighted and feel free to copy and paste it wherever you want. I'm tired of a litigious society of lazy people and frivilous lawsuits. You want to publish this, go right ahead. Just try to convince them on a second post that this crap was really yours.~
Mortgage Consultant & Fellow Human Being