Do FHA Mortgage Borrowers Still Face Credit Score Layering?
Written by David Batchelor on January 21, 2012.
More that a year has passed since HUD announced that it would investigate 22 lenders. The issue? Layering, the addition of requirements on top of FHA standards.
The investigations, said HUD, are in response to 22 complaints the National Community Reinvestment Coalition (NCRC) filed with HUD alleging that the loan activities of the mortgage originators showed that their home lending practices deny FHA- insured loans to African Americans and Latinos with credit scores as high as 640. Federal Housing Administration (FHA) guidelines allow mortgages to borrowers with credit scores above 580, provided the borrowers have down payments equaling 3.5 percent of the loan amount, or above 500, provided the borrowers have down payments equaling 10 percent of the loan amount.
In the usual case lenders can set whatever terms they want to underwrite a loan.
Recent Comments