FHA Update- Lenders tightening FICO requirements:

A number of lenders nationwide are offering FHA mortgages – but with terms that are tougher than the FHA requires.

“Wells Fargo & Co., the second-largest U.S. home lender, and Taylor, Bean & Whitaker Mortgage Corp., the biggest privately held mortgage company, are raising credit score requirements and other standards for government-insured loans,” according to Bloomberg News.

“Wells Fargo,” says Bloomberg, “boosted the minimum credit score for Federal Housing Administration and Department of Veteran Affairs loans it makes through brokers to 620, according to a Jan. 27 notice from the San Francisco-based bank. Ocala, Florida-based Taylor Bean ‘recently’ increased its requirement to 600 from 580, Chairman Lee Farkas wrote in an e-mail.”

With government-supported programs now accounting for almost all new U.S. mortgages, lender standards that are tighter than the FHA’s own requirements may erode a steady source of home financing and deepen property-price declines. The changes may help lenders lessen risk and reduce foreclosures by weeding out more consumers who have missed debt payments in the past.

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