|Two wholesale lenders are increasing the minimum credit score required on government loan programs.Credit scores on third-party originations of loans insured by the Federal Housing Administration or guaranteed by the U.S. Department of Veterans Affairs have been increased, Kevin Waetke, communications manager for Wells Fargo & Co.’s home and consumer finance group, said in a statement to MortgageDaily.com.
Waetke noted that the San Francisco-based institution continuously reviews its mortgage product mix and underwriting practices in light of current marketplace risks.
“We assess and respond to evolving market trends in a proactive, judicious manner,” the statement said. “This change is a reflection of our commitment to do business with brokers and correspondents who manage to the economics and risks of the mortgage industry.”
Wells — which has recently been hiring contract workers by the hundreds to help it meet increased demand recently — didn’t respond to a question about whether the move was made to moderate demand and keep activity within existing capacity.
But another wholesaler did.
Taylor, Bean & Whitaker Mortgage Corp. is also tightening underwriting on FHA and VA loan programs.
“Not at all,” Taylor Bean Chairman Lee B. Farkas responded to MortgageDaily.com’s inquiry about moderating demand. “The tightening is due to increasing delinquencies in our GNMA portfolio.”
Farkas explained in a statement that default rates on loans with lower FICO scores were many times worse than with borrowers who have higher credit scores.
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