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     | Monday, February 28, 2000 - 03:24 am  I just received appoval for a FHA loan with 3% down. On the condition that I pay off charge offs and sell my present home. The loan officer said my score was 551 he said he thought he could get appoval. He did. After reading info on this board and others, I discovered that FHA had a min score for approval I think it was in the 600s. SO I called another Company and ask what was going on. He said with that score he didn't see how it was possible. He said that if the guy gets me approved then Go with it. Please explain what the first guy did. Thanks Steve PS: I signed the paperwork. I close as soon as my present home sells.
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| | Monday, February 28, 2000 - 09:14 am Please tell me where "on this board or others" someone says that HUD has a minimum credit score requirement for FHA borrowers. I've worked in the mortgage business for over seven years, mostly in Secondary Marketing, and I have never heard of this. HUD has always been rather explicit about its position on credit underwriting: borrowers who do not use credit, or who do not use revolving credit, cannot be denied solely for making this choice. I really don't think it's helpful to know what your score is without knowing why you scored that low. What were the top four reasons for your score? If they mostly involve absence of credit or length of established credit, it doesn't surprise me in the slightest that you were approved by a lender.
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| | Monday, February 28, 2000 - 04:14 pm I agree with Anonymous. FHA is not score driven.
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| | Tuesday, February 29, 2000 - 04:05 am From Fannie Mae's web site ("Desktop Underwriter® for FHA Loans, Questions & Answers"): "Q: Do Desktop Underwriter and the pmiAURA system consider the borrower's credit history or overall credit score? "A: The pmiAURA system looks at the borrower's overall acceptable credit score..." http://www.fanniemae.com/singlefamily/technology/mornetplus/mp_du_fhaqa.html
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| | Tuesday, February 29, 2000 - 04:15 am Q; DOES HUD HAVE A FICO CUTOFF? A; NO.
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| | Tuesday, February 29, 2000 - 05:30 am Sean: Congratulations on finally finding the truth. But I see you're back to your old tricks. You said, "FHA is not score driven." What happened to this: "I have come to a difficult decision and that decision is to stop posting on Bayhouse. Effective immediately I won't be frequenting this site anymore... "? (from BayHouse Real Estate, Finance and Credit Forum: Credit: CATEGORY: Discussions on Morality, Ethics, Consumer Protection and Misc.: Bye bye, Bayhouse) It hasn't even been a month. http://www.bayhouse.com/discus/messages/4/304.html?TuesdayFebruary820000506pm
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| | Tuesday, February 29, 2000 - 06:34 am Voigtkampff and I had a few private email conversations and he convinced me that I should begin posting again.
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| | Tuesday, February 29, 2000 - 08:42 am Let's stick to the subject, please. Perhaps Christine can open a new topic for bickering. I know I don't want to read it. My point, Greg, is that "considering" a score is not the same thing as having a numerical cutoff point. Let me say that I do share many of your (and others') concerns about credit scoring. I don't think the calculations should be secret, I worry about any number that is only as accurate as the creditors' often crappy reporting to the bureaus and the bureau's even worse reporting back to everyone else, and finally, I believe that credit scores are too tied in to the specific desires and needs of credit card issuers to be all that useful to secured lenders. It should go without saying that using credit scores in employment, insurance, apartment rentals, and so on is moronic. That's why I have always been impressed by HUD's historical animosity toward credit scoring. If you read the credit underwriting guidelines for FHA mortgages--and I think Greg has posted a link to 4155 before--you see the philosophy of a "hierarchy of credit." HUD says, basically, that if your housing payment history is good and your installment payment history is good, you are an acceptable credit risk UNLESS there are serious derogatories on revolving history. If you don't have a revolving history, that's fine. Actually, if you don't have an installment history, you are allowed to be judged by an "alternative credit report" using information about utilities, insurance payments, rent-to-own contracts, child care expenses, and so on to establish that you pay your bills. In other words, you can get an FHA loan even if you're the type of person the credit card companies hate. In my view--based on the same limited information everyone else has--FICO scores are designed as much to find "profitable" credit card customers as they are to measure credit worthiness. I would also like to note that I was involved in getting approval for my company to run FHA loans through Loan Prospector in 1998. Two months after we started, the underwriting manager was in my office with her knickers in a knot because LP was approving FHA loans that the underwriters would have denied (or adversely conditioned). She was, of course, afraid the underwriters would "get in trouble" for this. I told her they wouldn't, and asked for more details about these loans. Her first example was someone with "crappy credit" (her wonderfully objective term) who lived in a trailer park and whose letter of explanation for the credit problems was "illiterate." Fortunately for the customer, Freddie Mac didn't program these prejudices into LP. Steve's original posting did not, after all, involve a denial of his application by an automated underwriting system. It involved, as far as I can tell, a human idiot on the phone who made an uniformed remark without examining all the information. I'd personally rather take my chances with LP or DU than with a lot of the loan originators and underwriters it has been my misfortune to work with.
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| | Tuesday, February 29, 2000 - 09:43 am My point, Anonymous, is that misinformation lives, including statements like: "FHA is not score driven." Whether they're an incompetent, a "human idiot on the phone who made an uninformed remark without examining all the information," or a liar, I'll take them on, every time, to contain them. And, at that moment, because their credibility is relevant, and I will bring it up-- every time. Isn't that, in fact, what this thread is about: blowhards? "HUD's historical animosity toward credit scoring" is coming to an end, wouldn't you agree? http://www.hud.gov/pressrel/pr99-231.html
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| | Tuesday, February 29, 2000 - 10:01 am It is entirely possible for a person to have no FICO score at all and get FHA 203(b) mortgage insurance. That is what I mean when I say that FHA isn't score-driven.
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| | Tuesday, February 29, 2000 - 10:26 am I didn't make myself very clear. I don't think HUD's animosity toward FICO scoring is ending. I do not think that HUD is FICO-score-driven. I understood the original post to be about FICO scores. I think Sean did, too. HUD has been saying for some time that it has no problem with automated underwriting as long as it meets HUD's underwriting guidelines. The link you've provided points out that HUD has developed its own automated underwriting system. I would assume that this system, designed by HUD, will use the same underwriting assumptions that HUD tells human UWs to use. Among these are HUD's specific requirements about credit history. As far as I can tell, these requirements are incompatible with what appear to be the criteria used by FICO. Perhaps this is why the press release you link to says absolutely nothing about the use of FICO scores within HUD's automated underwriting system. My own experience tells me that automated mortgage underwriting at least has the potential to be fairer than FICO scoring. It's all a question of what a system considers to be useful or significant about a credit history, and how that information relates to other aspects of the deal. HUD says they're gonna tell us all what their rules are. Fair, Isaac says, "none of your business." However, I think we can see from what Fair Isaac has said, and what credit reports continue to show, that FICO is too concerned with how many credit cards you have, how often you carry a balance, how likely you are to switch to another cardholder (that inquiry thing), etc. So good on HUD for designing its own scorecard. I really don't want to get into a pissing match with anyone. I've learned a lot from this forum. I do, however, sometimes have a hard time following the arguments in a thread, because they keep getting punctuated with who-said-what-to-whom in the past about the forum rules. Of course folks have the right to post such comments. It's just that I, like probably a lot of people, skim past them looking for "the point," and--I'll certainly admit--occasionally I miss it. So if you and I agree that misinformation should be stamped out wherever we find it--and I think we do--I'm merely suggesting that we're more effective when we stick to that point and ignore side issues like what Sean said last month about what he wasn't going to say this month. Since neither of us is likely to be nominated to run for President (although the world would of course be a better place if we were), we're not likely to benefit by confusing each other and everyone else with intrusive bickering. Or am I just another blowhard?
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| | Tuesday, February 29, 2000 - 10:56 am Anonymous: You can decide that for yourself. How could it not be FICO score-driven when FHA loans are evaluated by LP (as you even stated is done at your company)? What score are they using, if not FICO? You said, "So good on HUD for designing its own scorecard." But, here's the information I have (which sounds like it isn't in operation yet): "Recently --very recently HUD economists have been working for a couple of years with Fair, Isaac on estimating their own scorecard based on FHA borrowers." http://creditscoring.com/pages/forumtranscript.htm#page84 Yet, even as we speak, as I pointed out above, the system used by Fannie Mae to evaluate FHA loans "... looks at the borrower's overall acceptable credit score... " Are you saying that's not the credit bureau score we all know-- FICO?
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| | Tuesday, February 29, 2000 - 11:43 am Greg: Thanks. I've decided I'm not a blowhard. "How could it not be FICO score-driven . . ." Both LP and DU get the FICO score. I consider a FICO score to be a credit bureau score. In other words, it considers nothing except what is in a credit repository. What it considers about that data, is, of course a mystery. Nonetheless, LP and DU have that FICO score, along with all kinds of other information like income, loan-to-value ratio, reserves left after closing, savings, net worth, debt ratios, blah blah blah. The final judgement from the system--accept, refer, or caution--takes all those factors into account. Somehow. Let us concede that while Fannie Mac have been "opening the book" on what the criteria are, they are no more willing than Fair, Isaac is to release the calculations. If you want to call this "judgement" a score, okay. I would specify that it is a mortgage underwriting score, not a credit bureau score. So FICO credit bureau scores are in there, to be sure, but do they "drive" the system? Only the programmers at Fannie Mac could answer that question for all time, I suppose. It has been my experience that LP and DU are more sensitive to FICO scores when the loan being underwritten is conventional. When the loan is an FHA, I think FICO scores matter much less. I base this on looking at results over time. I wish I could point to something in writing on a website, but that's the problem. Nobody has really given any of us a "glass box." But I wonder if part of our disagreement isn't a semantic question of what "driven" means. I would submit that the FICO score influences, but does not ultimately determine, the mortgage underwriting score. I've certainly seen plenty of loans involving 700+ credit scores come back with a "caution," just as I've seen FHA loans come back with an "approval" with a credit score of 580. God apparently lived in some other detail. "Recently . . . HUD economists . . ." I've read the FTC transcript, and I have to agree that these people give a pretty sloppy presentation for folks who had some warning that they were going to be on a panel. I don't always know what they're trying to say. The paragraph after the one you quote says that HUD has found "mortgage scores" to be predictive "within" certain groups. If "mortgage score" here means LP or DU decision, and if "within" groups means that poor people aren't unfairly being compared to rich people, I can't disagree with that statement. If the presenter is fudging here--sliding from "FICO score" to "mortgage score"--I think that's pretty underhanded. Again, I'd like to see where HUD has made any public statement whatsoever about using FICO bureau scores alone or even primarily to predict mortgage performance. It wouldn't surprise me that HUD consulted with Fair, Isaac on developing a credit bureau score. They are (sadly, some of us would say) the industry "pioneers" of credit bureau scoring. Does this mean that HUD's new automated underwriting system is going to use the FICO credit bureau score as its sole determination of satisfactory credit history? Or does it mean that HUD is determining its own way to score credit bureau history, one that matches its underwriting philosophy better than FICO's?
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| | Tuesday, February 29, 2000 - 01:40 pm Greg, I agree with Anonymous that we should stick to the topic, but I wanted to clarify something. I did not convince Sean to return. I cajoled, pleaded, begged and wore him down by attrition. Not the least bit ashamed to admit it. Sorry for the interruption.
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| | Tuesday, February 29, 2000 - 01:57 pm Henry Ford was a "pioneer," but was also a union-buster. Bill Gates: "pioneer." Not working for him these days. That's Fair, Isaac's PR in over-drive to point-out that they were, supposedly, there first-- and have the right to do as they please, having blazed the trail in the snow, driving rain and desert heat-- with their bare hands in their Conestoga wagons. I don't have any answers to the questions in your last paragraph, but I'll be asking for my score-- if it is one that will be used to evaluate me. Semantics? Give me a break. Sean could have used that line, but he didn't. He can speak for himself. You seem to be torn: "That's why I have always been impressed by HUD's historical animosity toward credit scoring." "I don't think HUD's animosity toward FICO scoring is ending." "So FICO credit bureau scores are in there, to be sure... " The FICO score exists in FHA loan underwriting. So, it doesn't sound to me like they have animosity toward FICO scores, but I'll let you decide if they still do (but what difference does that make, now that scores are used?). Since the details are not disclosed, it is an on/off, yes/no, black/white issue to me. If the FICO score is used (and we know it is in FHA loan evaluations)-- no matter to what extent-- I want to know my score.
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| | Tuesday, February 29, 2000 - 02:43 pm Wow. Greg, I put the word "pioneer" in quotation marks. Where I come from, quotation marks indicate either a direct quote or dripping sarcasm. In this particular case, it was both, as I was alluding to your quite humorous treatment of the "pioneer" hype on creditscoring.com, a site I've read and enjoyed. I thought I could get away with a little (subtle?) irony because I thought I made it clear that I was certainly not arguing that credit scores should be secrets. Of course we should all have access to our scores. We should also have access to the methodolgy and actual calculation methods. We should also have legal guarantees that the data used to compute these scores is accurate and relevant. We should not have to pay the bureaus to check on it, either. Why should anyone get trashed for wondering if we really agree more than we disagree? That's what I meant when I said perhaps we were arguing about semantics, and then went on to define my terms as carefully as I could. I didn't want to have a pointless debate. So you turn that into an insult to me and to Sean. Killing two critics with one stone? Perhaps I'd better have some private e-mails with Voigtkampff. I too am beginning to wonder if it's worthwhile to present a challenging viewpoint on this board. And I've only been at it since Monday.
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| | Tuesday, February 29, 2000 - 03:53 pm The debate isn't pointless, or I wouldn't be in it. I'm not trashing you, nor am I insulting you. Your statements are just inconsistent, that's all. But, you could come back as another anonymous poster, and no one would know the difference between that person and this one, so what does it matter? You're way too thin-skinned, and are using the classic comeback of the vanquished: the other side has points, but they just weren't very nice about it. And now, you yourself are off the subject and into pathos. The response, if you have none on the subject, is no response. There are no hard feelings from me, and I would rather have you stay around. But your statements conflict with each other, and I'm going to point it out. One side will always be right, and one wrong. What this really boils down to is this: scoring is so secret, it creates wonderful cocktail conversation, where everybody's opinion counts-- because the real answers are locked up (by Fannie Mae, Freddie Mac and Fair, Isaac). FHA loans use FICO scores.
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| | Tuesday, February 29, 2000 - 04:33 pm The best response going forward is no response.
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| | Thursday, March 02, 2000 - 09:08 am I, for one, thank Voigtkampff and Sean for their discussions that led to Sean's return. There are a few regular posters here who have contributed a TON of VERY VALUABLE information. Sean is DEFINITELEY one of them. I have been tremendously helped, over the past year, by information he has directly contributed. The information by all these knowledgeable people is manna from heaven for those of us seeking any hint of an answer, a lead, a solution, etc. Please don't let personal tiffs evolve to a point where the "needy" information seeker is deprived of a very useful source of information for the sake of some personal vendetta.
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| | Friday, March 03, 2000 - 04:35 am Hi I'm the original poster of this question >> Thanks for the reponse to my question. So it looks like the second mortgage guy was either uninformed or simply badmouthing a Competitor. Steve
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| | Friday, March 03, 2000 - 12:34 pm Yeah. A 551 score does not in-and-of-itself pose a barrier to qualifying for FHA insurance. A good rule of thumb for FHA insurance is to have twice as many good tradelines as bad, 6 positive tradelines and no unpaid collections. So a person with three paid collections and six current credit cards could hope to qualify with the FHA 203(b) program.
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| | Friday, March 03, 2000 - 12:57 pm Sean: I've never heard that rule of thumb. Who said that? Anonymous: The Uniform Residential Loan Application asks for "Yrs. School." For what is that information used?
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| | Friday, March 03, 2000 - 01:40 pm That information is from a mortgage broker by the name of Geoffrey at Southwestern Mortgage (818) 366-5200. He specializes in providing mortgages to people with past serious delinquencies and/or bankruptcy.
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| | Saturday, March 04, 2000 - 03:23 am This is the Internet (which uses typed information), and to-date, there's no way to quickly translate a telephone conversation into text for a message board. Practical speech recognition technology is still a dream. Joffrey Long Souwthwestern Mortgage 818-366-5200 newport191@aol.com http://reservices.com/creditproblems/ Mr. Long: Your name came up in a discussion on an Internet message board. You are quoted as having said that a good rule of thumb for FHA insurance is to have twice as many good tradelines as bad, 6 positive tradelines and no unpaid collections. Could you please explain how you know that? The thread is http://www.bayhouse.com/discus/ in "Credit: I got approved for a FHA by one and not the other." Please join us.
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| | Friday, March 17, 2000 - 05:24 am Anonymous said: I would also like to note that I was involved in getting approval for my company to run FHA loans through Loan Prospector in 1998. Two months after we started, the underwriting manager was in my office with her knickers in a knot because LP was approving FHA loans that the underwriters would have denied (or adversely conditioned). She was, of course, afraid the underwriters would "get in trouble" for this. I told her they wouldn't, and asked for more details about these loans. Her first example was someone with "crappy credit" (her wonderfully objective term) who lived in a trailer park and whose letter of explanation for the credit problems was "illiterate." Fortunately for the customer, Freddie Mac didn't program these prejudices into LP. The Uniform Residential Loan Application (used for Conventional, FHA, VA, and FmHA loans) has a box for "Yrs School." Is education level relevant to the loan approval?
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| | Friday, March 17, 2000 - 08:27 am It makes you wonder if (all of a sudden) people whose last names start with the letter M start defaulting (just by random chance), will the scoring models start reducing scores depending on the first letter of your last name?
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