By Agency reporter

Thursday, 18 Nov 2010

New York: Home ownership may be falling out of reach for more Americans as lenders toughen their standards for Federal Housing Administration-insured loans beyond what the agency itself requires.

Bloomberg reported on Wednesday that mortgage lenders including Wells Fargo & Company and Bank of America Corporation, the two largest, had raised the minimum credit score on FHA-insured loans that they will buy to 640 from 620. About 6.3 million people fall within that range, according to FICO, which created the formula for the ratings.

The higher hurdles for FHA loans, used in about a fifth of US home purchases, add to challenges for a housing market already struggling with record-low sales and surging foreclosures. While lax lending fueled the bust that led the US into recession, the new requirements will stifle the real estate recovery needed to revive the economy, said Ron Phipps, president of the National Association of Realtors.

”We‘ve gone from silly to stupid,” Phipps, principal partner of Phipps Realty Incorporation, said in a telephone interview from his home in Warwick, Rhode Island. ”People who should be getting credit can‘t get it.

 

Source: Punch