Key Mortgage Events of 2010
Minimum Credit Scored Raised to 640
During 2010, the mortgage lending industry saw credit requirements tighten. The minimum mid FICO score was raised from 580 to 640. That alone removed almost 30% of potential home buyers from the market place. For those considering on purchasing or refinancing in the next six months, it would be beneficial to obtain all three FICO scores issued by Experian, Transunion and Equifax. The mortgage lender will use the mid of the three FICO scores to determine if the consumer meets the minimum mid FICO score requirement.
Federal & State Licensing For All Georgia Mortgage Loan Officers
The State of Georgia required all mortgage loan officers be Federally and State licensed beginning in 2010. All loan officers were required to take 40 hours of classroom instruction and pass a test for their federal license. The state of Georgia requires 20 hours of classroom instruction as well as passing the states test and good credit. A loan officer will be denied a license if they have had a foreclosure, bankruptcy and/or behind in child support payments. The state of Georgia also requires your license be renewed annually. Each year the state of Georgia obtains a new credit report on each registrant to insure the mortgage loan officer still complies with their credit requirements. However, if a mortgage loan officer works for a Bank, they are not required to meet the State of Georgia’s licensing law requirements since banks are federally regulated. As a consumer, it would be beneficial working with a licensed loan officer that has meet all the requirements implemented federally and by the state of Georgia.
Interest Rates Hit Historical Lows
We, also, saw mortgage interest rates hit their lowest levels in over 50 years during 2010. The lower rates gave the consumer extra buying power.
What To Expect in 2011
Stricter Underwriting & Credit Requirements
So what does 2011 hold in store for the mortgage industry? New directives were issued by the secondary mortgage market requiring even more stringent credit guidelines effective January, 2011. A minimum two year credit history is required. A minimum of three rated trade lines must be on the credit report. “Authorized User” accounts may not be used to satisfy the three trade line requirements. Lastly, all trade lines must be rated for a minimum of twelve months. It is recommended to those intending on purchasing in next six months to obtain their credit report to insure all of these requirements are met.
Fall Out From The Georgia Licensing Law For Mortgage Loan Officers
Since the state of Georgia implemented the mandatory licensing for all mortgage loan officers in 2010, there is not a history of the renewal ratios. However, the State of Florida which has required licensing for all loan officers for over 30 years saw a significant drop in license renewals. At the beginning of 2010, there were over 40,000 licensed loan officers. In December, 2010, there were approximately 10,000 registrants that had applied for their 2011 license.
Interest Rates for 2011
Interest rates are beginning to rise. Fannie Mae and Freddie Mac have already issued announcements that their delivery fees for each mortgage lender will increase effective February, 2011. So far this month, we have seen mortgage rates increase one half of one percent. As rates begin to rise, this will reduce the dollar amount a consumer may qualify when purchasing a home.
Order Your Financial House
Looking back at 2010 and looking forward to 2011, it’s important to keep your financial house in order. To begin that process, obtain a copy of your credit report yearly. Equifax will provide you with a free credit report once a year as required by Georgia state law. Contact a licensed mortgage officer to review your credit report. The mortgage loan officer is able to direct you if the credit history or FICO score needs improving. Again, be sure the mortgage loan officer is licensed by the state of Georgia.
Becky Weiller (GRMA #26686 & NMLS #56401) is a Senior Mortgage Banker at Supreme Lending. She has been a mortgage professional for over 25+ years. You may contact her at: firstname.lastname@example.org or visit her website at www.beckyweiller.supremelending.com . Becky’s passion for placing her clients in the best possible mortgage plan is exceeded only by her desire to help her clients through the arduous process of buying a home.