Mortgage

Movement Mortgage lowers FICO minimums, rolls back overlays, will retain servicing

Lowers FHA, VA, FICO minimum to 620

Since the coronavirus first began impacting the economy, much of the narrative in the mortgage business has been about how numerous lenders are tightening their standards to address the growing uncertainty in the market.

But that trend appears to be reversing, at least at one of the nation’s fastest growing lenders.

Movement Mortgage CEO Casey Crawford told his employees Tuesday evening that the company is undoing many of the recent changes it made to its mortgage lending policies.

Crawford told employees that the company is rolling back many of its overlays and lowering its minimum FICO credit scores on Federal Housing Administration and Department of Veterans Affairs loans to 620.

The move is the opposite of what many lenders have done in recent weeks, with many lenders raising their FICO minimums to 680 or above.

Beyond that, Movement is also moving to retain the servicing on nearly all of its mortgages. According to the company, they will now retain servicing on most of their GSE and government loans.

“We believe this step gives our loan officers a competitive advantage, will deliver immediate pricing improvements and grant more flexibility on credit,” the company said in a statement provided to HousingWire.

“Movement first began retaining servicing on conventional loans for its top producers in early 2020,” the company continued. “Market conditions this spring created an opportunity to expand that position across the broader origination portfolio.”

While the company will be retaining its servicing, Movement doesn’t plan to handle the servicing itself. According to the company, Movement reached a subservicing agreement with ServiceMac, which will begin servicing both government and agency loans for Movement. That change is effective immediately.

The move comes after weeks of strife in the mortgage servicing industry with companies and groups across the board sounding the alarm on a looming liquidity crisis due to the rise of loans in forbearance.

But, servicers were granted a bit of a reprieve this week when Fannie Mae and Freddie Mac announced that servicers will only be required to advance four months of missed payments for loans in forbearance. After that, the servicer is under “no further obligation to advance scheduled payments.”

Fannie and Freddie also announced that they will begin buying loans that go into forbearance within the first month.

Both moves are designed to provide more certainty to servicers and improve liquidity in the mortgage business.

It’s under those conditions that Movement is moving to retain its servicing and change its lending policies.

In a statement, Crawford said that these changes will help Movement and its loan officers compete in a trying market.

“Our nation is looking to the mortgage industry to help lower the overall cost of credit for Americans and support our economy through this pandemic,” Crawford said. “By making a decision to retain our servicing, Movement loan officers are much better equipped to offer even more competitive pricing and serve even more borrowers as we live out our mission of loving and serving people in communities across America.”

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