Fort lauderdale, FL (PRWEB) February 08, 2012
In a move that seems to defy conventional wisdom, the Department of Housing and Urban Development has asked mortgage lenders to relax their minimum credit score requirements allowing a greater number of applicants to receive an FHA loan.
Until the mortgage bubble burst as a result of subprime lending practices in the past, Federal Housing Administration loans were easily accessible to a wide range of borrowers. That changed with the mortgage meltdown and increased tightening of underwriting standards and credit score requirements. Presently, an FHA insured mortgage requires a 700 plus credit score. Judi Lisbin, spokesperson for http://www.GetCreditRepair.org a company that helps consumers improve their credit scores by removing erroneous and outdated entries on credit reports said, “A good majority of our clients, whose credit scores would have otherwise qualified them for a mortgage, have been shut-out by the current high credit score requirements imposed by the lenders.”
One reason for the higher score criteria is that currently mortgage lender performance is compared to the average default rate for all FHA loans, which subjects the lender to a higher default rate if they approve a loan to a borrower with a lower credit score. For the lenders, high default rates subject them to additional FHA and HUD audits, and possible indemnification demands for actual and future loan losses. To avoid these consequences, lenders are more comfortable offering loans to borrowers with higher credit scores. Before they agree to the request from HUD, the lenders are demanding that the current method of performance review be changed so loans with similar credit scores and risk characteristics are monitored and compared one another.
Lisbin said, “Until HUD and the lenders agree on a system that accommodates each of their needs adequately, the only way for a borrower to qualify for an FHA guaranteed loan is to get their credit score up; and many borrowers ignore this relatively simple step before applying for a home loan.”
GetCreditRepair.org works with consumers, credit bureaus and creditors to resolve negative,
erroneous and outdated items on credit reports. For more information about credit repair contact 1-800-665-9981, email udcmanagers(at)udcteam(dot)com, or go to http://www.getcreditrepair.org
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Source Article from http://www.prweb.com/releases/2012/2/prweb9177463.htm
