Low Credit Scores can quailfy for conforming rate mortgages

Recently I've had a few customers who had poor credit scores (in the 500s) and were having difficulty obtaining financing from other lenders. Many mortgage brokers or loan officers (usually new to the business with little or no training) make the assumption that these borrowers are automatically sub-prime and try to sell them a 2/28 mortgage at 9% (paying 2 points). Loan Officers should always run these files through DU or LP, especially if you have compensating factors -- lots of reserves, clean mortgage history, stable job history, etc. because you never know. It's a good way to gain a customer from the competition and it certainly is in the best interest of the customer.

My customer last month had a 581 middle FICO score, with a BK discharge 3 years ago. And he was looking for 100% financing, of course! His options were limited to say the least and he had already been turned down. I was able to get an EA1/Eligible through DU, and give him a conforming 30 year fixed rate mortgage. Yes, he has to pay MI but he's still in a better position, the loan was approved based on the DU findings and he's in his home. Oh, and there was a 3% sellers concession.

Certainly there are many instances where a sub-prime score = a sub-prime loan, but this is not always the case. (www.stevehawkmortgage.com)