This week, Wells Fargo announced that it is lowering its credit requirements for loans backed by the Federal Housing Administration (“FHA”).
Prior to this change in policy, the minimum FICO credit score that Wells Fargo required for an FHA loan was 640. Effective February 2014, Wells Fargo will accept FICO scores as low as 600. This will allow the company to offer mortgage credit to a broader base of consumers.
In 2013, Wells Fargo was among several other large banks to reach a major settlement with Fannie Mae and Freddie Mac over bad loans. In December 2013, Wells Fargo agreed to pay Fannie Mae and Freddie Mac $591 million to resolve “repurchase claims,” which related to the faulty mortgages that Wells Fargo sold to Freddie Mac in the years preceding 2009, totaling $869 million. Reaching this settlement has allowed the company to spring forward. In fact, in its most recent earnings release, the lender posted record earnings!
Is this a sign that the housing market is finally recovering?
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