In Depth Analysis: CalculatedRisk Newsletter on Real Estate (Ad Free) Read it here.

Sunday, April 20, 2014

WSJ: Slight Easing of Mortgage Credit Standards

by Calculated Risk on 4/20/2014 10:51:00 AM

From Nick Timiraos and AnnaMaria Andriotis at the WSJ: Mortgage Lenders Ease Rules for Home Buyers in Hunt for Business

While standards remain tight by historical measures, lenders have started to accept lower credit scores and to reduce down-payment requirements.
Another sign that banks could get less picky: Credit scores for borrowers seeking conventional mortgages also are easing. Scores on purchase mortgages stood at 755 in March, down from 761 a year earlier, according to data from Ellie Mae, a mortgage-software provider. Those on purchase loans backed by the FHA dropped to 684, compared with 696 one year earlier. ...

Smaller lenders are accepting even lower scores. Average credit scores on purchase loans closed through a consortium called LendingTree fell to 679 in March, down from the year-earlier 715.
"Tiny fractions of borrowers can do things that they could not a year ago," said Lou Barnes, a mortgage banker in Boulder, Colo.
No one wants a return to the loose lending standards of the mid-00s - and I hope we never see another Alt-A loan - but I expect standards to loosen over the next few years.