FNMA Announces More Changes
FNMA announced in their latest mortgagee letter Wednesday that they were raising their minimum credit score to 620. On the surface this doesn't mean much since it was hard to get a conventional loan approved through FNMA with a credit score less than 620 anyway. The significance of it is this, since FHA and VA have no minimum credit score technically, we can no longer sell FNMA our FHA or VA loans that had scores between 600 and 620.
All the investors that we usually sell to have quit accepting loans with scores below 620 for some time. When we had loans that were good loans and met FHA or VA guidelines and the score was between 620 and 600 we knew we had no investor that would take it so then we would sell directly to FNMA. FNMA's position on this was always if FHA or VA were to audit the file and come back and not provide insurance (FHA) or guarantee (VA) because they felt we did not meet the guidelines, then FNMA would require us to buy the loan back. Okay, fair enough. Not any more with scores below 620.
The problem with this is occasionally a real estate agent sells a house to a recently divorced person for example. The ex-spouse, who got the house, has been late on the mortgage payment for the past 3 months. It will probably bring the real estate's client score well below 620. Even if they provide a divorce decree showing they were not responsible if the score is below 620, sorry no can do.
This blog was written by Steve Brown of Gold Financial Services, universal City, TX. Gold Financial Services is a full service mortgage banking firm with a wide variety of conventional and government loan products, including Texas Veterans Land Board assistance program. www.mortgagesbysteve.com (210)862-2885 sbrown0007@aol.com
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