Posts Tagged ‘FICO’

FHFA, Invisible Credit, and Change$ to Fannie and Freddie

August 8th, 2017 Comments off

A bipartisan pair of lawmakers – Senator Tim Scott, (R-SC), and Senator Mark Warner, (D-VA) – have come together to create a bill that aims to increase homeownership through reform of credit guidelines for those with “invisible credit.

Invisible Credit” is when individuals or families have paid their bills – like utilities, phone, and internet – on time. But they still don’t have any – or a good – FICO credit score.

  • FICO scores are typically based on such items as: credit card and loan debt and repayment,
  • the degree of credit utilization,
  • length of credit history,
  • and outstanding debts,
  • among other factors.

Such as change would allow the Federal Housing Finance Agency (FHFA) to use non-traditional credit scoring models to determine creditworthiness of applicants.  That would increase the numbers who qualify for loans, and allow the Government Sponsored Enterprises (GSEs) of Fannie Mae and Freddie Mac to approve these types of loans, per American Banker.

I’m focused on encouraging sustainable homeownership over a simple homebuyership. One way to do so is the [Federal Housing Finance Agency] updating the accepted credit scoring models of the GSEs,” Scott said at a Senate Banking Committee hearing last month. “If a family pays their utility bills or their phone bills on time for a decade, it ought to count towards their ability to have a home.”


Senator Sherrod Brown (D-OH). official photo.

Providing financing for more middle-income people who can pay their mortgage is so important,” Sen. Sherrod Brown, D-OH, “because there is such a terrible housing shortage for moderate-income people.”

MH Industry Professionals, Interests and Concerns

That there are manufactured home industry professionals – including lenders – who are open to providing more moderate-income or even low-income Americans with access to home loans through alternative credit is a step in the right direction.

But expanding access to chattel loans is the current hot-button topic in manufactured housing.


mel watt jacquelyn martin associated press postedDailyBusinessNewsMHProNews

Mel Watt, credit, AP.

According to HousingWire, though the Scott-Warner bill has been introduced and appears to have some support, FHFA Director Mel Watt says that anything changing before 2019, would be a “mistake.

Watt vows that no changes will go into effect before then.

First, based on the overwhelming feedback we have received from the industry, it is clear that it would be a serious mistake to change credit scoring models before mid-2019 when the Common Securitization Platform is fully operational and the Enterprises implement the Single Security,” Watt said.

He added, “For this reason, any credit score model change would not go into effect before 2019 even if I announced a decision today.”

Second, we believe that, regardless of the decision we make on credit score models, the short term impact on access to credit will not be nearly as significant as was first imagined or as the public discourse on this issue has suggested,” says Watt.

Credit scores are only one factor the Enterprises use to evaluate loan applications and the Enterprises currently use the same or even greater levels of credit data in their underwriting systems as the credit scoring companies use.”

So while members of Congress attempt to move in one direction, the FHFA intends to hold off on that for at least another two years until mid-2019.

Both groups admit that in order to determine creditworthiness fairly under guidelines other than the FICO score that there will need to be more data, which will take time to collect.


Adding more credit scoring models to the market would require some data validations … time periods that adds costs,” Brenda Hughes, senior vice president at First Federal Savings Bank of Twin Falls in Idaho, said during testimony at a Senate Banking Committee hearing last month.

We think it’s very important for them to begin updating their credit models to take advantage of those other sources, which we think will widen the net of folks who become eligible for conforming mortgages” purchased by Fannie and Freddie, said Charles M. Purvis, president and CEO of Coastal Federal Credit Union in Raleigh, N.C.. # #

(Image credits are as shown above, and when provided by third parties, are shared under fair use guidelines.)

JuliaGranowiczManufacturedHomeLivingNewsMHProNews-comSubmitted by Julia Granowicz to Daily Business News for MHProNews.



One Percent Down Could Put You in a Home

July 25th, 2016 Comments off

Mortgage  andyenstallblog  credit postedDailyBusinessNewsMHProNewsAccording to nationalmortgagenews, Chicago-based retail originator Guaranteed Rate has been offering 1% down mortgages through a new nationwide program. Called Double Match, the additional two percent is available through a down payment assistance program, and is completely forgivable for qualified borrowers.

MHProNews understands the plan is applicable to condos, town homes and single-family homes. It could not be immediately determined if the program is also available for manufactured homes.

While Guaranteed Rate will allow borrowers to include it with a mortgage credit certificate for tax purposes, the program can be applied to homes of $417,000 or less. Borrowers are required to have a FICO score of 680 or better to qualify. Income requirements will vary by locale. ##

(Photo credit: andyenstallblog)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J Silver to Daily Business News-MHProNews.

Stepping back into Housing Bedlam?

July 21st, 2014 Comments off

Writing in, Lynn Effinger states evidence is mounting we are sliding back into another housing downturn. He says the shadow inventory of foreclosures which have not been released into the marketplace is artificially inflating home values. He notes the rise in institutional investors buying up bank-owned properties and making them rentals is backfiring because they did not consider home prices falling and vacancy rates rising. With over 30 years experience in the housing market, Effinger informs MHProNews fewer first-time buyers are entering the market, despite the low interest rates, because there has been little effort to create decent-paying jobs that would support sustained growth in homeownership. In addition, some lenders are lowering their FICO scores to accommodate borrowers, and the federal government is once again encouraging lenders to make loans to low-income buyers—a tactic that, in part, led to the housing downturn and subsequently the Great Recession. He also decries the gridlock in Washington that has prevented leadership/legislation from effectively dealing with the housing marketplace, perhaps because our elected officials are likely more concerned with getting re-elected than solving problems. ##

(Image credit:–housing slides)

Lenders Say Housing Recovery is Happening

April 9th, 2013 Comments off

According to what HousingWire tells MHProNews, 70 percent of lender professionals believe the housing recovery is real, and will continue to improve during the coming six months. Sixty percent of bankers think credit will be available over the next six months for refinancings, and 59 percent say credit will be available for residential mortgages. Andrew Jennings, chief analytics officer at FICO, says, “ Mortgage lenders have been understandably guarded over the past five years. The improvement in their sentiment should be welcome news, and I wouldn’t be surprised to see lenders cautiously expanding their mortgage and home equity lending businesses.”

(Image credit: HousingWire)

Big Banks Set Higher FICO Minimums

November 17th, 2010 Comments off

Bloomberg reports higher hurdles are here for FHA loans. Mortgage lenders including Wells Fargo & Co. and Bank of America Corp have raised the minimum credit score on FHA-insured loans that they will buy from 620 from 640. About 6.3 million – some 15 percent of borrowers – fall within that range. Ron Phipps, president of the National Association of Realtors told the reporter the new requirements will stifle the real estate recovery needed to revive the economy.