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FHA Is Making More Mortgages Available To Applicants With Risky Debt Profiles

September 4th, 2018 7:15 AM by Jackie A. Graves

Is it easier today for home buyers with a high debt ratio and subpar credit scores to qualify for a mortgage than it has been in years? And if so, what might that mean for first-time and repeat buyers who are struggling with credit and debt issues but still hope to buy a home?


When the Federal Reserve recently polled senior bank executives on whether they’ve been loosening credit criteria for home-mortgage applicants, most bankers said, “No way, not us.” They’ve kept their rules tight to avoid the problems the lending industry experienced in the housing bust of the past decade. Studies by the Urban Institute’s Housing Finance Policy Center have estimated that lenders’ historically strict underwriting standards have prevented millions of would-be buyers from becoming homeowners. Researchers said that between 2009 and 2014, 5.2 million mortgages were “missing” — that is, they would have been made if lenders had relaxed their tough post-recession requirements.


But there’s new statistical evidence that, at least in some areas, standards have been easing. A study conducted by credit-score developer FICO and released in August found that credit scores for new mortgages have been dropping.


Posted by Jackie A. Graves on September 4th, 2018 7:15 AM


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