Fair Isaac and Company (FICO) announced the release of a new credit scoring product called the FICO 8 Mortgage Score. It was specifically designed to help lenders make better credit decisions in predicting mortgage performance risk and is now available from all three major U.S. credit reporting agencies – Experian, Equifax and TransUnion.

According to FICO, the FICO 8 Mortgage Score will analyze a borrower’s full credit history on file to deliver a better assessment of mortgage repayment risk and hopefully help cut down on the number of future foreclosures. FICO claims a 15% performance improvement over the standard credit scores currently available and says the new product includes additional score reason codes to help lenders understand and explain the scores to mortgage applicants.

Continue Reading FICO Announces New Mortgage Credit Score

Tags: buyers, credit reports, mortgages

Congress has voted to keep the maximum size of loans guaranteed by Fannie Mae, Freddie Mac and FHA at their current levels through the end of 2011. For buyers in high cost areas, the maximum mortgage amount will remain at $730,000 for Fannie/Freddie loans and at $625,000 for FHA mortgages.

Anything above these limits set by Congress falls into a category known as “Jumbo” loans. During the financial crisis, mortgage lenders became far less willing to make these types of loans and thus Congress had to act. A typical level for Jumbo loans used to be around 18% annually. This year, they’ve made up roughly 5% of the mortgage market. However, this is likely to change as the premium gap for borrowers who receive jumbo loans has fallen to about a 0.8 percentage points. Prior to the crisis, the premium level was 0.25 percentage points.

Continue Reading Congress Extends Loan Limits

Tags: buyers, legislature, mortgages

In an effort to support stability in the housing market, Fannie Mae is updating its policies regarding the future eligibility of borrowers after they have experienced a Pre-Foreclosure Event – a pre-foreclosure sale or deed-in-lieu of foreclosure. Basically they are adjusting their underwriting guidelines to try and shorten the time it takes for delinquent borrowers to recover mortgage eligibility after losing their homes.

Here’s a synopsis of the changes:

• The “waiting period” time that must elapse after a Pre-Foreclosure Event is changing and will be dependent on the LTV ratio for the new transaction. The waiting period will commence starting on the completion date of the pre-foreclosure sale or deed-in-lieu of foreclosure.

Continue Reading Fannie Mae Updates Delinquent Borrower Policy

Tags: Florida, mortgages

Buyers and investors looking to purchase a property using FHA financing have some good news and bad news to consider. FHA commissioner David Stevens outlined the agency’s new policy guidelines last week. Included in his announcement were changes to “seller concession” ceilings and new FICO score related down payment requirements that went into effect immediately. Changes to the 90 day “anti-flipping rule” go into effect today. And finally, proposed changes to the “upfront” mortgage insurance premium and the “annual” mortgage insurance premium that are slated to go before Congress for approval shortly and should be in place no later than mid-year at the latest.

Here’s a synopsis of the changes to HUD’s guidelines:

Continue Reading New HUD Guidance for Property Flippers and First Time Buyers

Tags: FHA, HUD, mortgages, real estate

For buyers or investors looking to purchase a short sale property using FHA financing, HUD has put in place some tough guidelines going forward into the New Year. A letter sent to FHA lenders by Commissioner David Stevens last week spelled out the agency’s revised policy regarding short sales. HUD made it quite clear they are not going to tolerate individuals trying to “take advantage of declining market conditions” on principal residences or simply “renting out their current house” in order to buy another property that is a lower priced short sale.

Here’s a summary of the latest guidance:

• Applicants for new FHA insured mortgages will be denied new financing – effective immediately – if they participated in a short sale on their current principal residence.

Continue Reading New HUD Guidance for FHA Loans and Short Sales

Tags: FHA, HUD, mortgages, real estate