An estimated one third of Americans now have FICO scores below 620, according to one consumer group’s estimate.
Wells Fargo’s newly revised policy actually dips the FICO score cutoff line well below 580 — all the way down to deep subprime 500 — but also sets strict underwriting hoops and snares to weed out unqualified applicants. For example, borrowers with scores between 500-579 will need a 10 percent down payment from their personal resources. They will not be able to use gift money from relatives, friends or a charitable down payment assistance program to meet the 10 percent upfront equity test.
Home buyers with scores of 580-599 will need 5 percent down payments, and will be prohibited from supplementing their own cash with gifts.
Borrowers with FICOs above 600 will qualify for 3.5 percent down payment FHA deals, but will be allowed to use gift money. Contributions from home sellers to defray buyers’ closing or loan origination costs will be limited to 3 percent.
Debt-to-income ratios will be tight: 31 percent for monthly housing-related expenses, and 43 percent for total household debt service.
The expanded program will only be available through Wells’ retail lending channel, not through third-party brokers or correspondent lenders. To read more on this topic visit Inman News at Share http://www.inman.com/…
Ken Harney who writes an award-winning, nationally syndicated column, “The Nation’s Housing,” and is the author of two books on real estate and mortgage finance.
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Wilson Real Estate Investment, LLC. Charlotte, NC. I have a strong desire to create win/win home buying and selling agreements. I am particularly good at looking outside the box, when structuring agreements. I have had great success working with single mother in my area, through the NSP and the CRA programs. I believe that neighborhoods have greater stability when homeowners are kept in these neighborhoods. I am always looking to partner with local investors. My mission is to help rebuild our communities by renovating existing homes and providing good quality affordable housing for both retail buyers and the rental market. And to help reclaim our cities through purchasing and renovating existing structures to help promote growth without the requirement of new construction. "We stand for investing done the right way. We control our success, stick to our criteria, ensure strong multiple exit strategies and make the best informed decisions to achieve our goals of minimizing risk and maximizing annualized return."
Ceno Wilson/Managing Partner Wilson Real Estate Investment, LLC. 704-469-2843 Charlotte Information on Lease to Own Blog Check us out Twitter We're on Facebook Ask me about our Private Money Investment Module.
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