BREAKING NEWS: Qualifying For FHA Loans During Coronavirus Pandemic Mortgage Crisis
Gustan Cho Associates is getting countless calls from borrowers who are getting conflicting reports as to qualifying for FHA Loans During Coronavirus Pandemic Mortgage Crisis.
- Many are often confused because they are turned down from qualifying for an FHA loan by lenders
- Others who are shopping for an FHA loan are getting quoted ridiculously high rates
- Yet others with good credit scores are getting quoted high mortgage rates and discount points on FHA loans
- So what is going on with FHA loans during coronavirus pandemic mortgage crisis?
- Did HUD, the parent of FHA, change agency guidelines on FHA loans?
- The answer is no. HUD did not change any lending guidelines on FHA mortgages
- However, mortgage companies have implemented a flood of lender overlays on FHA loans due to the mortgage crisis in the secondary market
- Investors in the secondary market have found any mortgages with borrowers under 640 FICO next to worthless
- This is the main reason why lenders have imposed lender overlays on credit scores to higher than 640
- Most lenders have imposed minimum credit scores to 660 to 680 FICO PLUS points
- Chase Mortgage just announced today they will no longer accept FHA, VA, USDA Loans and all conventional loans need to have 700 FICO and have 20% down payment
- The mortgage industry is going through a mortgage crisis and changes
- Qualifying for FHA Loans During Coronavirus Pandemic Mortgage Crisis is challenging but not impossible
- The great news is Gustan Cho Associates Mortgage Group is open for business for borrowers with under 620 credit scores and down to 500 FICO
- Gustan Cho Associates still has no lender overlays on government and conventional loans
In this breaking news article, we will discuss and cover qualifying for FHA Loans During Coronavirus Pandemic Mortgage Crisis.
How The Coronavirus Pandemic Mortgage Crisis Is Affecting The Mortgage Markets
All lenders need to have borrowers meet the minimum HUD Agency Mortgage Guidelines on FHA loans.
- However, lenders can impose higher lending standards of their own that are above and beyond the minimum HUD Guidelines
- Lender overlays can be imposed on credit scores, debt to income ratios, and other risk factors sustained by lenders
- The coronavirus pandemic outbreak caused major chaos in the mortgage industry
- The economic crisis due to the economic crisis has tanked Mortgage-Backed Securities (MBS) causing major liquidity issues in the secondary bond market
- Due to the illiquidity issues, the secondary mortgage bond market has altogether stopped buying mortgage bonds on under 640 FICO borrowers
- What this means is lenders with mortgage with borrowers with under 640 FICO cannot be packaged up as MBS and cannot be sold in the secondary mortgage bond market
- Therefore, most lenders have increased credit score requirements on FHA loans as well as other government and conventional loans
However, Gustan Cho Associates Mortgage Group is still able to originate and fund government loans with under 620 credit scores and down to 500 FICO. Gustan Cho Associates still has no lender overlays on government and conventional loans.
Typical Lender Overlays On FHA Loans During Coronavirus Pandemic
Lenders came out with lender overlays on credit scores as soon as the mortgage crisis started due to the coronavirus pandemic outbreak.
- Lenders who had a minimum of 580 credit score requirements have increased credit score guidelines to 660 to 680 FICO literally overnight
- Not only did lenders increased credit score requirements but they also increased mortgage rates plus required discount points to be paid
- So in a time when mortgage rates are at an all-time historic low, lenders are charging all-time mortgage rates as well as discount points for borrowers with credit scores under 680 FICO
- Most lenders do not want any borrowers with credit scores under 640 FICO on FHA loans
- The good news is Gustan Cho Associates are still catering to borrowers with lower credit scores and still has its no lender overlays policy on government and FHA loans
- Until further notice, many lenders have stopped doing manual underwriting until the coronavirus pandemic crisis has been resolved
- Other overlays imposed by lenders is they stopped doing FHA 203K loans, reverse mortgages, and one-time FHA and VA construction loans
- Other lenders have halted all down payment assistance mortgage programs until further notice
- Non-QM Loans are suspended until further notice
As of today, we do not know whether these overlays imposed by lenders will be permanent or just temporary until the coronavirus pandemic crisis is over.
Qualifying For FHA Loans During Coronavirus Pandemic With A Lender With No Overlays
Gustan Cho Associates is approving borrowers with lower credit scores and has no lender overlays on government and conventional loans. If you were told you do not qualify for a mortgage due to not meeting a lender’s overlays, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at email@example.com. We can approve you for an FHA loan with under 620 credit scores during the coronavirus pandemic mortgage crisis.
April 7, 2020 - 4 min read