http://www.wsj.com/articles/wells-fargo-to-offer-low-down-payment-mortgages-without-fha-backing-1464235261
The move comes as most of the country’s main banks exit from any
substantial role making loans guaranteed by the FHA. The agency insures
mortgages made to buyers who would otherwise have a hard time getting
loans, but it has been shunned by banks following a wave of lawsuits by
the Justice Department that alleged poor underwriting.
Wells
Fargo, which made $6.3 billion in FHA-backed loans last year, is the
only mainstream bank in the FHA’s top 20 originators, according to trade
publication Inside Mortgage Finance.
The bank’s new mortgage
allows borrowerswith credit scoresas low as 620 on a scale of 300 to
850to make down payments of as little as 3%, while also allowing them
to use income from family members or renters to qualify. The
requirements don’t represent a significant expansion of mortgage access,
but will allow Wells Fargo to make more loans to low- and middle-income
borrowers without going through theFHA.
The bank’s new program,
which was launched through a partnership with mortgage-finance giant
Fannie Mae, could replace about of half the bank’s current FHA volume
and increase its market share, a person familiar with the matter said.
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