Fannie Mae tightens standards
Friday, April 4, 2008 at 04:37PM Fannie Mae, the mortgage buyer, has told lenders that it will require a minimum credit score for the loans it buys, tightening mortgage standards to protect itself from record foreclosures sweeping the country.
From the New York Times,
"The latest steps are part of amended underwriting practices for loans Fannie Mae buys, aimed at adjusting prices to reflect heightened housing market risk and protecting the company’s capital, a Fannie Mae spokesman, Brian Faith, said in a statement on Wednesday.
Fannie Mae will require a minimum score of 580 for most loans, adding that it will still acquire loans with lower credit scores in certain circumstances.
Credit scores generally range from 300 to 850 and are used by lenders to predict a borrower’s ability to pay on time.
Mortgages with credit scores below 620 made up less than 6 percent of Fannie Mae’s conventional single-family business volume in 2007, according to the company’s annual report."
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