A local lender has informed me that the the minimum FICO score for an FHA mortgage is now 620. I remember vividly getting people approved in the 90’s with scores barely above 500. It didn’t happen routinely, but 580 did.
I find this ironic: rates are fantastic and prices are down, but if someone gets caught in the undertow of the recession they can’t take advantage. It’s like cheap real estate on the moon; all you need to do is figure out how to get there and it’s yours. These people pay taxes to bail out the lenders to the tune of almost a trillion dollars, and what do the lenders do in return? Shut them out. It is just another sign that, stimulus program or not, the lenders don’t want to extend credit.
The FHA program was not broken and didn’t need repair. I am not a “storm the Bastille” kind of guy, but it is a disgrace if lawmakers allow this to stand. I support the banks eliminating bad loans, but I don’t support them only making loans to the elite. FHA is for the little guy. At least, it was.