I am a real estate broker and just wanted to share this. Between yesterday and today I have had all my lenders call me to tell me the same thing: They can’t do FHA loans under a certain credit score any more…..the most common I am hearing is 640.
The tl;dr reason I am getting from them: Unemployment is skyrocketing, so a lot of people are going to miss mortgage payments. The stimulus bill mandates servicers to advance up to a year of borrower payments on government-guaranteed/insured and conforming mortgages to every borrower that requests forbearance and attests to financial hardship caused by coronavirus. The mortgage services don’t want to be left holding the bag and don’t have the liquidity to cover the advances. So any FHA loan that looks marginally risky is getting the hook. I had a couple of FHA transactions that were supposed to close next week. Those would-be home buyers literally got a call from their lender saying they could no longer fund the loan. They are now scrambling to try and figure out where they are going to live, while I am calling every lender I know to see if somehow someone can get their loan closed. This shit is about to get crazy.
Disclaimer: This is a guest post and it doesn’t represent the views of IWB.