Lenders may be easing up on underwriting standards as the proportion of loans with FICO scores below 700 has risen dramatically
Lenders may be easing up on underwriting standards as the proportion of loans with FICO scores below 700 has risen dramatically.
According to Ellie Mae’s Origination Insight, 48% of mortgages originated in June had credit scores less than 700 versus only 28.53% of all mortgages one year ago, in June 2012.
The results may be indicating that lenders are looking to ease-up on some areas of underwriting guidelines to make up for slowing originations, said Louis Amaya, head of National Asset Direct, a real estate and mortgage investment and management company.
The report also showed that there was a more diverse FICO distribution across originations. Loans with 700+ FICO scores still make up the vast majority (52%), but there was a larger number of originations in both the 621 to 659 category (up to 15.41% from 8.15%) and in the 660 to 699 category (18.34% to 29.80%).