New PMI Rules For Minimum FICO Scores

Effective Feb. 15, 2007, the following changes in Mortgage Insurance and FICO scores will be implemented on conforming FNMA & FHLMC loans.  This includes the popular FNMA “My Community Mortgage” program.

All loans with an LTV over 95% and a FICO score less than 620 will have Mortgage Insurance priced as an A-Minus loan regardless of the Automated Underwriting decision.

All loans with an LTV over 95% will REQUIRE a FICO score over 575. Lenders will no longer approve loans with greater than 95% LTV and a FICO less than 575 regardless of Automated Underwriting decision.

These new regulations will help to curb the default rate on loans. At least due to the reasons that have pushed and are continuing to push the foreclosure rate up to record levels in many parts of the country. The new practices will eliminate a great many of the product situations of the past few years, with 100% loans to folks with 520 credit scores. This caused the buyers in the Memphis area to ask for outrageous seller concessions to get in to the home. Which in turn, became a standard of sorts. This in turn caused homes that probably should appraise for $170,000 to be appraised at $180,000 or $185,000 to make room for the seller concessions. Then the neighbors see this and think their home is worth $190,000 because they built the fence them selves. It's not a good cycle to be in. Of course no agents were complaining when their listings sold, or their buyers got in to a home.

• Rate this Post!

  Select Your Rating:

  • 5 Stars (Excellent!)
  • 4 Stars
  • 3 Stars
  • 2 Stars
  • 1 Stars (Poor)

• Share this Post

  Share With A Friend:

  Your Name Your Email

  Friend's Name Friend's Email

  Optional Message

  Send

• Print
• Social Bookmarking

  Add to Bookmarks: