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

By
Mortgage and Lending with SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) NMLS 223495

Wells Fargo FHA Program 600 Fico: Mike in Tucson, AZ mortgage lender600 FICO!  3.5% Down!  "A Proactive Approach Because You Deserve It!"  ...and other marketing drivel...

Inside Wells Fargo...

According to an insider at Wells Fargo Bank, this program (nationwide) has resulted in the following since its recent inception:

  1. 10,000 loan applications (Good!)
  2. 5,000 loan rejections (Bad!)
  3. 18 loan approvals (Ugly!)

The rest of the loans are still out there in limbo.  (That's a technical term for "We haven't gotten to your loan yet.  We're busy working on other loans.)

REALTOR Marketing Implications:

  • This is not a profitable segment of your market.  Don't spend a lot of emotional capital or marketing dollars pushing a horse that won't run.
  • These are hard loans to get approved.  Wells Fargo isn't the only bank to agree to accept loan applications under this FHA program, but the results they've had ought to put up a huge red flag for agents hoping to close FHA purchases.
  • Don't beat up your lender.  If you're going to work this segment of your market, make sure you use a lender who knows the guidelines.  The guidelines are VERY strict.  The reason that those 18 loans got approved is likely due to a lot of leg work on the part of the Loan Officer PRIOR to submitting the loan to Underwriting.

 LENDER Marketing Implications:

  • This is not a profitable segment of your market either.  Don't spend a lot of emotional capital or marketing dollars pushing a horse that won't run.
  • Educate your REALTOR friends!  Their buyers will be flooding them with calls because of the marketing pieces done by Wells Fargo and others.  Help them understand how stringent the underwriting guidelines are for FICO scores this low.
  • Do your homework.  Be prepared to lose REALTOR relationships if you and the agent don't tag-team the buyer with the same message.  If your REALTOR has an expectation that her 600 FICO buyer can get a loan--and you don't do it--you're going to lose that relationship.

Implications for my borrowers:  There's A Better Way!

  • It's much easier for me to help you get your credit score up from 600 to 640 than it is to leave you where you are and hope that you can buy a home.  Let's talk!

 

_____________________

I'm Mike in Tucson, your preferred Tucson Arizona Mortgage Lender.

NMLS #223495

SUNSTREET MORTGAGE llc ~ Correspondent Mortgage Bank
Offices (AZ) Mesa, Tucson, Sierra Vista, and Nogales.

 

 

close

Re-Blogged 6 times:

Re-Blogged By Re-Blogged At
  1. D B 04/05/2011 09:09 AM
  2. Melanie Serrato 04/05/2011 10:01 AM
  3. Lou Ludwig 04/05/2011 12:42 PM
  4. Brett Pehrson 04/06/2011 05:27 AM
  5. Cheriamor Houston 04/06/2011 05:50 AM
  6. Karen Cooper 04/15/2011 04:14 PM
Topic:
Mortgage / Finance
Groups:
Realtors®
The Economics of Real Estate
The FHA Mortgage Group
AZ Real Estate Blogging Network
Bananatude
Tags:
fha mortgages
mike in tucson
tucson mortgage
sunstreet mortgage llc
600 fico loans
wells fargo 600 fico

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Rainmaker
1,384,827
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

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.

Apr 06, 2011 02:37 AM #45
Rainer
161,750
Jim Poole
Tampa, FL
Zero Down, USDA Purchase Loans, FHA 203(K) Rehab & VA Streamline Loans

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

Apr 06, 2011 02:44 AM #46
Rainmaker
2,190,202
Elizabeth Weintraub Sacramento Realtor Top 1%
RE/MAX Gold - Sacramento, CA
Put 40 years of experience to work for you

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?

Apr 06, 2011 02:44 AM #47
Anonymous
Anonymous

Great post! I was a mtg broker for 15 years. This is kinda like those special modification programs that take Thousands of people and approve like 6- come on! I have always showed people how to get their scores up- now it is imperative.

 

Apr 06, 2011 04:29 AM #48
Rainer
64,385
Brett Reichel
Homebridge Financial Services - Rancho Cucamonga, CA
MLO 210215

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

Apr 06, 2011 04:42 AM #49
Rainmaker
923,325
Larry Brewer - Benchmark Realty llc
Benchmark Realty LLc - Nashville, TN

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.

Apr 06, 2011 05:09 AM #50
Rainer
243,496
Brett Pehrson
Advanced Funding Home Mortgage, NMLS#13287 - Salt Lake City, UT

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!

Apr 06, 2011 05:24 AM #51
Rainer
243,496
Brett Pehrson
Advanced Funding Home Mortgage, NMLS#13287 - Salt Lake City, UT

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!

Apr 06, 2011 05:30 AM #52
Rainer
5,798
Cheriamor Houston
Coldwell Banker Residential Brokerage - Chicago, IL
ADPR, CNE

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

Apr 06, 2011 05:40 AM #53
Rainmaker
28,945
Bill Rozek
Embrace Home Loans, Inc. - Potomac, MD
NMLS #214260

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.

Apr 06, 2011 05:51 AM #54
Rainer
5,798
Cheriamor Houston
Coldwell Banker Residential Brokerage - Chicago, IL
ADPR, CNE

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!

Apr 06, 2011 05:55 AM #55
Rainer
417,753
James Loftis
RealEstate911.com - West Palm Beach, FL
RealEstate911.com
Thanks Mike, for sharing this information.
Apr 06, 2011 07:24 AM #56
Rainer
5,781
Bradley Eggers
Midwest Equity - Palatine, IL

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.

Apr 06, 2011 08:30 AM #57
Rainer
247,741
Doug Bullwinkel
Envoy Mortgage, NMLS 6666 - Roseville, CA
Mortgage Loan Originator NMLS #281609

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. 

Apr 06, 2011 08:19 PM #58
Rainer
13,856
Stephen-Michael Washington
Pre-Approval, First Time Buyer, Fixed Rates - Birmingham, AL
FHA and VA Mortgage Loans Alabama
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!
Apr 07, 2011 06:00 AM #59
Rainer
253,678
Shay Campbell
Universal American Mortgage Company - Raleigh, NC
Raleigh, NC

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.

Apr 08, 2011 04:50 AM #60
Rainmaker
232,779
Ken Barker Realtor® GRI, E-Pro Certified
Dilbeck Real Estate - Burbank, CA

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.

Apr 10, 2011 04:02 PM #61
Rainer
213,991
Doreen McPherson
Homesmart ~ Scottsdale ~ Tempe - Tempe, AZ
Phoenix Arizona Real Estate ~

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!  

 

Apr 11, 2011 08:40 AM #62
Rainer
213,991
Doreen McPherson
Homesmart ~ Scottsdale ~ Tempe - Tempe, AZ
Phoenix Arizona Real Estate ~

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

Apr 11, 2011 08:42 AM #63
Anonymous
Tyler

No, Bait and switch means they get you interested in one service, aka low score loan with the intention of switching you to a different product like credit repair. Unless wells fargo offers this service directly then its not a bait and switch.

May 05, 2011 10:09 AM #64
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