What was once considered an excellent credit score now disqualifies a borrower from obtaining a mortgage. The COO of mortgage industry services provider Ellie Mae (AMEX: ELLI) put the issue in stark terms:
Last month [February], if your FICO score was below 720 or you had a down payment or equity of less than 25%, there was a good chance that your refinance application for a conventional loan was denied or you were offered a significantly less attractive interest rate.
Closed loans on those refinance applications required a FICO score of 770 and a loan-to-value ratio of 65%. Those numbers are pretty much unchanged since last August, when a closed loan required a FICO score of 763 on an loan-to-value ratio of 65%.
To purchase a home in February, a borrower needed a FICO score of 764 and a loan-to-value ratio of 78%, again virtually unchanged since last August.
Unless borrowers don’t need a loan, chances are pretty good that they won’t get one.
The report is available here.