Borrowers with sub-660 credit face loan hurdlesNovember 2, 2012 @ 12:10 pm
While lenders claim that standards for loans insured by the Federal Housing Administration have stayed about the same as they were in 2006, borrowers with credit scores lower than 660 are facing a tougher time in getting approved, according to a new survey by the Federal Reserve of 68 domestic banks and 23 U.S. branches and agencies of foreign banks.
Overall, the survey found that lending standards for prime and nontraditional mortgages have mostly been unchanged the last three months. The survey did find that mortgage demand is picking up - for both residential and commercial and industrial lending.
One of the main reasons behind the upswing in loan applications: More homeowners trying to take advantage of the Home Affordable Refinancing Program, HARP 2.0, aimed at helping underwater homeowners refinance.
For the commercial sector, several domestic banks reported easing in many commercial and industrial loan terms to borrowers. The reason? Most of the banks cited "more-aggressive competition from other banks as the main reason for easing up on some standards."
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