Tammy Mitchell Hines & Co. House to Home Newspaper Apr. 2014 Edition | Page 7

BUYER’S CORNER

Wells Fargo
Lowers Credit
Score Limit for
FHA Loans
by Pete Carey
A move by Wells Fargo Bank to lower the bar
for certain government-backed mortgages is stirring
hopes of homeownership among people with credit
scores battered by the recession.
The San Francisco-based bank, which is the
country’s biggest mortgage lender, said recently that it
would begin accepting scores of 600, down from 640,
for loans from the Federal Housing Administration
and the Department of Veterans Affairs, which
require as little as a 3.5 percent down payment.
JPMorgan Chase hasn’t said whether it will
follow suit. Bank of America said “there may be
cases” where it would accept a credit score “in the
lower 600 range,” depending on the borrower’s
ability to repay the loan.
“Credit is loosening up,” said Guy Cecala of Inside
Mortgage Finance. “It was overly tight right after the
credit crisis in 2008 and really had nowhere to go but
looser.”
Banks are motivated to increase lending to
homebuyers because of a decline in refinancings.
Wells Fargo’s mortgage lending business was $50
billion in the fourth quarter of last year, down from
$80 billion the previous quarter and $125 billion in
the last quarter of 2012.
The FHA accepts scores down to 580 and even
lower in some circumstances, but finding a lender to
make such loans can be difficult and for people with
damaged credit the loans can be costly. Wells Fargo
is offering a 30-year fixed FHA mortgage at 4.25
percent, although mortgage insurance and fees bring
the effective rate up to 5.837 percent.
Joe Gonzales, a metalworker wh