Mortgages might be easier to get as Wells Fargo lowers credit requirements
Mark Calvey
Senior Reporter-
San Francisco Business Times
Wells Fargo is making it a bit easier to qualify for a mortgage.
The nation’s largest residential mortgage lender lowered its minimum credit score for loans to be sold to Fannie Mae and Freddie Mac to 620 from 660, Bloomberg News reported.
Wells Fargo’s move casts a wider net for borrowers as rising rates shut off the refinancing tap last year. That also resulted in thousands of layoffs at Wells Fargo and other lenders.
It also marks a shift in direction from last year when Chairman and CEO John Stumpf told investors on an earnings conference call that his bank was getting mixed messages from Washington on whether the bank should make it easier for Americans to qualify for mortgages.
Wells and other lenders significantly tightened credit standards after the 2008 financial crisis. Of course, such standards had only one way to move after an era when having a pulse was essentially all it took to get a home loan.
Bloomberg also reported that Wells Fargo’s (NSYE: WFC) smaller rivals also lowered their requirements to get a mortgage. The U.S. division of Toronto-Dominion Bank, for instance, reduced its down payment requirement to 3 percent without requiring costly mortgage insurance on qualifying loans.
Some may worry that banks are returning to a time of easy lending. But the industry has a long way to return to the days of the housing bubble’s loose lending, when former Wells CEO Dick Kovacevich said it would have been easier for some lenders to simply open their vaults and tell people to help themselves.