Mortgage Lenders Still Playing it Safe on Loans Sold to Fannie and Freddie
By John Bancroft firstname.lastname@example.org
Mortgage lenders that sell loans to Fannie Mae and Freddie Mac are still focused on delivering single-family mortgages with relatively low credit risk, according to an Inside Mortgage Trends analysis of loan-level data.
In the second quarter of 2015, 66.4 percent of loans sold to the GSEs had credit scores of 740 or higher. That was up from 64.4 percent in the first quarter and 60.6 percent during the second quarter of 2014.
The analysis is based on the method used by the Federal Housing Finance Agency in a study related to guaranty-fee pricing, and it ignores loans with credit scores below 620 (there aren?t many of them) as well as mortgages with loan-to-value ratios above 97 percent.
The GSEs do not get many loans with credit scores ranging from 620 to 699: only about 13.7 percent of their second-quarter volume fell in that category. That was down from 17.8 percent a year ago. For the full story and an exclusive table on GSE seller profiles, see Inside Mortgage Trends.