FNMA Minimum Credit Score 580
A few weeks after most lender set a minimum credit score of 580 for FHA loans. FNMA announces revisions to its Automated Underwriting System (Desktop Underwriter) that will include a minimum 580 credit score.
Fannie Mae sets the benchmark for all conventional loans. This is going to raise the bar even further for conventional loans, in addition to the 580 minimum credit score there will be an overall tightening of Desktop Underwriter and the loans it approves.
The announcement states: “Introduction of a 580 minimum credit score for loans underwritten through DU (Desktop Underwriter) or manually underwritten”
Additionally:
“Some loan casefiles will receive more conservative recommendations”
“All DU recommendation levels will reflect improved credit quality”
and “Reduced Approval Rates” in general!
These changes go into effect on May 31st. There is a serious tightening in the overall mortgage market and it has bled well beyond “subprime” we are seeing the effects now on ALL CONVENTIONAL loans and FHA loans. It will soon be more difficult to get a mortgage than it has been in the last 20 years.
Further FNMA is increasing the time period after a foreclosure to 5 years. Previously a borrower could get a FNMA loan 4 years after having a foreclosure, after June 1st 2008 it will be 5 years minimum after a foreclosure.
Borrowers with previous mortgage lates are also being effected. FNMA will no longer purchase a loan where a borrower has been 60 days or more late on the mortgage in the last 12 months! This is a big shift - 1 - 60 day late now excludes a borrower from getting a new conventional loan for 12 months, make sure you pay your mortgage!