Credit Scores on New Mortgages on the Rise in 2009

Thanks to tighter underwriting standards and a big jump in refinance activity, the average credit scores associated with getting a new mortgage are rising this year. According to numbers compiled by Inside Mortgage Finance, the average FICO score found on a new mortgage in early 2009 was above 700 –one of the highest levels ever recorded.

For new Fannie Mae and Freddie Mac loans, which accounted for roughly 60 percent of all mortgages made in the first quarter of this year, the average FICO score was a whopping 760. This was up from an average FICO of 748 in 4Q08. Even FHA, which is know for accommodating A minus type credit and has no minimum credit score requirement, reported an average FICO of 694 in February. This is well above the 660-670 level found in the latter part of 2008.

Borrower Behavior Changes Dramatically When They Become Delinquent

If you want to successfully influence borrower behavior, you better do it when they are current on their mortgage. That’s one of the messages coming out of a new Inside Mortgage Finance-sponsored study on how homeowners react to financial stress.

The research, based on a nationwide survey conducted by Campbell Communications in August and September, found that borrowers are much more flexible when they can prepare for problems in paying their mortgages. But once borrowers fall behind in making mortgage payments, their psychology changes dramatically. The study also found that home equity – either negative or positive – plays a major role in mortgage borrower behavior and performance.

For complete survey results, contact John Campbell at john@campbellsurveys.com or (202) 363-2069, or go to Click here for more info.

New Study to Examine Borrowers’ Reactions to Financial Stress

Nearly half of homeowners with a delinquent mortgage would elect to make a car loan payment before making a mortgage payment, according to preliminary results from a new Inside Mortgage Finance-sponsored study of mortgage borrowers and their attitudes towards handling financial stress. The new research examines how homeowners prioritize mortgage payments and under what circumstances borrowers would stop and/or resume paying their mortgage. The study is being conducted by Campbell Communications. For further information, contact John Campbell at john@campbellsurveys.com or (202) 363-2069.