As reported by Bloomberg.com earlier this month, several U.S. banks are easing credit standards for those seeking a new mortgage, as they attempt to find the happy medium between the stiff lending policies put in place after the housing crisis, versus the irresponsible practices that led to the collapse. Some of the highlights include:
- Wells Fargo cut it’s minimum credit score for Fannie & Freddie backed loans to 620 from 660.
- The U.S. unit of Toronto Dominion Bank lowered down payments to 3% without requiring mortgage insurance for some of the loans.
- Earlier this year, Western Bancorp started offering mortgages with “alternative income verification”. Still, those loans require at least 35% down, though they’re hoping to drop it down to 30%.
- Bank of the West (a unit of BNP Paribas SA) is often making exceptions to its guidelines for borrowers with credit dings caused by the recession that don’t accurately reflect their financial situations. For example, the bank might accept a lower credit score caused by delinquencies after a job loss, if a borrower has more than the typical minimum amount of required assets in the their bank account.