As the country struggles through the economic impact of the coronavirus, numerous mortgage companies have raised their lending standards to protect both borrowers and themselves. Now, one of the largest mortgage lenders in the country is joining that list.
JPMorgan Chase last week increased its minimum lending standards to require nearly all borrowers to have at least 20% down to buy a home, and raised its minimum FICO credit score to 700 on purchase mortgages.
Put simply, if a borrower doesn’t have a 20% down payment and a FICO score of 700 or above, they will likely not be able get a loan from Chase (as well as other institutions that are following suit) to buy a home. According to Chase, those lending standards also apply to refinances on non-Chase mortgages.
The bank will still move forward with refis under its previous lending standards if the loan is either serviced by Chase or in Chase’s portfolio, but for all other refis, it’s 700 FICO or look somewhere else.
The changes do not apply to Chase’s DreaMaker mortgage program, which makes loans available for low-to-moderate income borrowers with as little as 3% down and reduced mortgage insurance requirements.
With the changes, Chase becomes the latest lender to tighten its lending standards. Certain segments of the business, including government, non-QM, and jumbo loans, have dried up substantially as lenders pull back from loans that are seen as riskier than conventional loans. But as the crisis continues, lenders are beginning to change their conventional lending standards as well.
United Wholesale Mortgage, the second-biggest mortgage lender in the country, recently announced that it will require re-verification of a borrower’s employment on the day their loan is scheduled to close. The purpose of that move is to ensure that borrowers are actually still employed when their mortgage closes.
“If people don’t have a job, I’m not going to put them in a bad position,” UWM CEO Mat Ishbia told his employees. “By doing this, we’re protecting borrowers, the company, and the country.”
But UWM wasn’t the only one making employment verification changes as COVID-19 pushes layoffs to record levels in the U.S.
Fannie Mae and Freddie Mac recently announced that they changed the age of document requirements for most income and asset documentation from four months to two months. What that means is all income and asset documentation must be dated no more than 60 days from the date of the mortgage note.