My REALTOR Says You Can Approve My FHA Purchase With A 600 FICO Score, Just Like Wells Fargo

Mike, this doesn't seem to be worth the effort for only 18 approved loans. Raising the credit score is the only way to go.

Mike Thanks for speaking out for the rest of us in the lending arena.

I wondered about this myself because I've seen marketing pitches in California from Wells Fargo promising FHA loans with a FICO score of 500. I don't work much with those type of borrowers so I've no first-hand experience, but from what you're saying, the adage: if it sounds too good to be true it's not rings loud.

I also heard from a reliable source yesterday that Wells Fargo is making FHA loans to borrowers who were current on their mortgages and doing a short sale. That WF can do that loan concurrently (presumably before the "paid in full for less than agreed" hits). The other lenders I've heard talk about this type of FHA loan have overlays that say the borrrower must move 600 miles away, which pretty much eliminates every short sale seller-turned-borrower in California, no?

FANTASTIC post, Mike.  I think a lot of people focus on what we used to be able to do to their detriment, complaining: "If we could just get those low scores approved, we could move some houses"!  Not a good plan of attack.  We are, as you say, much better off focusing on a more highly quailfied buyer than trying to push through these tough loans.

Brett

Mike - I haven't used Wells Fargo for 5 years, and this is one of the reasons why, they never could get a loan closed on time, and they give their own customers bad service.

Mike - Great post!  Thanks for the stats on this!  I had heard something to this effect, but hadn't seen any hard numbers like this.  When I get those calls from clients and realtors, I've just told them, "sure I have the same program, but the likelihood it will go through is slim because these are the additional guidelines...no lates in the last 12 months, etc...how many people do you think have this kind of score and fit into these other credit guidelines?"  I agree with everybody else on here that it's easier to help them raise their scores over the course of a few months.  First Mortgage has never stopped doing these, but it isn't easy to get one through...Plaza Home Mortgage has just announced they'll go down to 580; I suspect it's under similar strict guidelines, as well.  I wonder how many loan officers are even going to attempt these anymore under the new compensation rules...  It's nice saying you have the program, but it's nicer to tell everybody what they're getting into if they want to try to get approved on the program!

BTW, Mike.  I hope you don't mind, but I'm going to re-blog your post!  I think people need to know this info!  Thanks again!

Wonderful! I'd work with you if I were in Arizona, Mike. :)

You are right that many of these folks don't qualify and even the ones that do can be a lot of work.  There is so much more to the process than the score.  Often these folks can't qualify just because of debt to income ratios, which shouldn't take any competent loan officer long to figure out.  Our company can do FHA down to 580 with the minumum FHA down payment and to 540 with a larger downpayment.  That said, they still have to meet all of FHA's other requirements and of course there can be no disputed accounts.

We have personally closed several loans for folks with scores between 580 and 620 in the last few months and one for a borrower with a score below 580, so we know it can be done.

As important as it is (or may be) to purchase a home, it is equally or more important to increase your credit score anyway. You might as well. Why not make it that much easier and faster for yourself??!! Credit scores effect more than just the ability to purchase a home!

Thanks Mike, for sharing this information.

Mike,

Great post.  I usually tell my Realtors that while I can go to 600, there is usually a reason that borrower is 600 and that reason is almost always covered in the other credit overlays.

This is one of the best  posts I've seen on this subject.  Thanks for bringing this important information to everyone's attention.  I've felt like I have been a lone voice in the wilderness on this subject. 

GREAT POST!!!! The big boys don't always have the best answers! You are absolutely right about raising a score quicker than dealing with one below 640. Great post!

Mike I read activerain blogs about every day.  This may be the best I have read.  I'm glad you are in AZ and not NC.  I would hate to compete against you.  I'm looking foward to more blogs from you.

Mike - Those are some stats that I never knew. It seems like a client is just a number on the desk sometimes.

And 620 FICO is the target for many. People need to get guidance from all of you lenders to get on track.

I haven't read the comments, so this may have already been said...  If they can't deliver on this product, wouldn't it be considered false advertising?  Seems like there should be some sort of requirement that says, if it won't work (can't be delivered), don't sell it!  

 

Actually, I'm sure they promote it knowing few will qualify... isn't that called bait and switch?  =-)