Wells Fargo loosens jumbo mortgage standards
Attempts to offset decline in originations
Wells Fargo has reduced some of its standards for high-priced home loans in order to combat the industry-wide plummet in mortgage volume, according to an article in Reuters.
The bank has eased its lending standards on mortgages it acquires from other banks, said spokesman Tom Goyda, for "jumbo" loans that are too large to receive a guarantee from government-backed mortgage companies.
The lower requirements for jumbo loans are the latest effort by Wells and other banks to loosen mortgage criteria that are still tight by historical standards. Of the large banks surveyed by the Federal Reserve in July, thirty-nine percent said they were somewhat relaxing requirements on prime residential mortgages, and all banks reported that demand for prime mortgages was at its highest level in a year.
This follows an announcement from the bank in February that it made the decision to move its minimum FICO requirement on Federal Housing Administration-backed mortgage loans to 600 from 640 for retail purchase customers.