Released: August 18, 2007

Credit crunch changes not just rates

Source: Kenneth Harney, Washington Post (Free Registration)

The mortgage credit crunch is not only affecting interest rates that home buyers are quoted, but it is also triggering changes in less visible areas, such as minimum credit scores, location and type of properties, and even controls on who orders credit reports.

These new restrictions magnify the importance of FICO credit scores and are giving rise to lawsuits against major creditors such as American Express and Citibank.

Recent run-ups in rate quotes for jumbo mortgages - those larger than $417,000 - have received widespread publicity, but more subtle underwriting changes by lenders have not. Yet some of these could actually have a wider impact.

In one such shift, the traditional cutoff point between prime and subprime loans - previously a FICO score of 620 - has migrated upward in recent weeks.

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