Wells Fargo and Bank of America - the country's leading mortgage lenders - say they will increase their minimum credit score requirement for mortgages backed by the Federal Housing Administration, reported Bloomberg. From now on, borrowers will need to possess a FICO credit score of at least 640 in order to qualify for a mortgage, up from the previous requirement of 620. Many buyers' moving plans had already been complicated by the difficulty of getting a mortgage in today's credit environment, and experts fear the problem could only get worse.
"We've gone from silly to stupid," Ron Phipps, president of the National Association of Realtors, told the news outlet. "People who should be getting credit can't get it. To have a healthy real estate market, you need activity. You need transactions."
The NAR's chief economist, Lawrence Yun, has also recently noted the difficulty many moving families have had in qualifying for a home loan.
At the same time, federal officials insist tighter credit standards are the best route to avoiding another mortgage meltdown. The FHA's David Stevens told Congress that his agency won't need a bailout, in part because tighter qualifications have resulted in a better class of mortgage borrowers.
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