Wells Fargo Lowers Credit Scores for FHA Loans
Wells Fargo is expanding its mortgage credit box now that it has substantially reduced its repurchase risk, according to the head of mortgage production at the giant bank.
Putback risk and indemnifications with the GSEs and FHA were “real issues for us,” according to Wells Fargo executive vice president Franklin Codel.
But a lot of those issues were resolved in 2013, he told members of the National Association of Hispanic Real Estate Professionals at their Washington conference.
“Putting those issues behind us has allowed us to get much more comfortable and we are starting to open up our credit box more. We have dropped our FICO minimum for FHA from 640 to 600,” he said Tuesday.
During 2013, Wells Fargo and other large banks reached major settlements with Fannie Mae and Freddie Mac over bad loans.
“The pendulum has swung the other way in 2013 and we will see more evidence of that in 2014 on the streets,” he said Tuesday.
The head of mortgage production also told the Hispanic real estate agents that Wells Fargo implemented the qualified mortgage underwriting requirements a month before the Jan. 10 effective date.
“We were monitoring the production flows,” Codel said, to see which loans would be rejected under the QM rule. “We found very, very few.”