Announcement By Major Lender That They Now Require Minimum of 620 Credit Score For FHA Streamline Refinance

For some time, there has not been a minimum credit score requirement for Texas FHA streamline refinance loans. Yesterday, it was announced by the last major lender that now they are requiring a minimum of a 620 credit score on all Texas FHA streamline refinance loans. The announcement was made by Taylor Bean & Whittaker that they were moving their minimum credit score requirement to 620 for all Texas FHA streamline mortgage refinances.

Details Of The Announcement of New Credit Score Requirements

FHA Streamlines (credit and non-credit qualifying) and VA IRRRL’s with Credit Scores below 620 must be LOCKED prior to July 13, 2009 AND must CLOSE (Note Date) no later than September 15, 2009, and must be delivered to TBW within 10 days after closing Loans in this category locked on and after July 13, 2009 will require a minimum FICO of 620. Clients will be required to obtain a 3 Repository credit report and utilize the standard method of determining qualifying FICO.

Any Conventional, FHA (including Streamline Refinance), or VA (including IRRRL) loan that exceeds $417,000 with a Credit Scores below 660 must be LOCKED prior to July 13, 2009 AND must CLOSE (Note Date) no later than September 15, 2009, and must be delivered to TBW within 10 days after closing Loans in this category locked on and after July 13, 2009 will require a minimum FICO of 660.

Clients will be required to obtain a 3 Repository credit report and utilize the standard method of determining qualifying FICO. In addition, any previously announced minimum Credit Score requirements that TB&W has put into place, that did not have a specified Closing date, will be required to be LOCKED prior to July 13, 2009 AND must CLOSE (Note Date) no later than September 15, 2009, and must be delivered within 10 days after closing. Therefore, any loan, regardless of whether it may be locked, registered or approved, that has a qualifying credit score below 620 (with the exception of those loans that have specified higher FICO requirements) must CLOSE (Note Date) no later than September 15, 2009.

TB&W will continue to allow non-traditional credit for those borrowers with no useable credit for the loan programs that allow the use of such credit in accordance with published guidelines. TB&W is fully aware that these limitations may result in the inability for a particular loan to meet these specified deadlines. TB&W will work as diligently as possible to accommodate all loans in the pipeline. We will be unable to grant any extensions or exceptions to these requirements.

Texas FHA Streamline Refinance: What This Announcement Means

Remember, according to FHA guidelines, the FHA Streamline refinance program doesn’t officially require a minimum credit score – but now virtually all lenders require a minimum of a 620 credit score. There may still be lenders who are able to do a Texas FHA refinance streamline, but it will be more difficult to find them.

Many people in Texas have an FHA mortgage loan that was taken out when rates were higher than they are now and are now wondering about their refinancing options. One of the most popular refinancing options for people who currently have an FHA loan is the FHA streamline refinance program.

The FHA streamline refinance will allow you to refinance your home without requiring that you prove income, assets or credit information.

Yes, that means that you can still participate in the FHA streamline refinance program if you have bad credit — as long as you have made your last 12 months mortgage payments on time.

Many people have been turned down by lenders for an FHA streamline refinance recently and have been told “FHA raised the credit score requirements and you now must have a 620 minimum credit score”.  This is not true. What is true is that many lenders have started requiring a 620 credit score, but not all lenders require that you have a credit score — and FHA does not currently have a credit score requirement for the FHA streamline refinance.

So — if you live in Texas, have an FHA mortgage loan and are in a higher than market interest rate, you are going to be eligible for the FHA streamline program as long as you have made your last 12 months mortgage payments on time – no matter what your credit score is!

Many people across Texas have been told by a lender that FHA is now requiring a minimum credit score for FHA streamline refinances.

This is not true!

What is true is that many investors have started requiring a minimum credit score for the FHA streamline program, but FHA has not implemented any sort of minimum credit score requirements.

So if you live in Texas and you have been told by a lender that FHA requires a minimum credit score, be sure to speak with a different lender — not all lenders are requiring a minimum credit score.

And when you are shopping for lenders, be sure to ask the question “are you requiring a credit score for the FHA streamline program?” and expect many lenders to say “yes”.

But some will say “no” — or at least as of today they will.

And remember, it could change at any time. But if you are living in Texas and currently have an FHA loan and a credit score under 620, you can still lower your monthly mortgage payment without having to completely re-qualify for a new loan. The Texas FHA streamline program was designed for people to take advantage of lower interest rates when they are available – regardless of their credit score!

Will this change in the future? It might. The trend is for lenders to start requiring a credit score verification for the FHA streamline program, so if you have a credit score below 620, act fast before the rules change.

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