And the Mortgage Banker with the Lowest FICO Score Is …

Although in today’s tight underwriting market few mortgage firms are willing to originate loans to consumers with dings in their credit history, at least four companies say they will consider applicants with FICOs of under 580, according to new survey figures compiled by National Mortgage News and the Quarterly Data Report.

The four firms include Prospect Mortgage, Sherman Oaks, Calif. (482 FICO minimum), RBS Citizens NA, Providence (502), Academy Mortgage Corp., Sandy, Utah (519), and Provident Funding Associates, Burlingame, Calif. (525).

The survey, however, has no qualifiers. There is no additional information on what these lenders ask in return for making a mortgage to such an applicant.

There is anecdotal evidence that some credit unions and community banks are beginning to fund mortgages that are not quite "A" credit, keeping the paper on their books.

Also, some banks will consider making lower FICO score loans as long as the applicant has substantial assets (or home equity) that can be tapped in the event of default.

Recently, Housing and Urban Development secretary Shaun Donovan said he is toying with the idea of hiking the 580 minimum FICO at the Federal Housing Administration. Then again, in today’s market very few (3% of the total) FHA borrowers are at that level.