Fifth Third Ups FICO Requirement on FHA Loans

Fifth Third, the mid-western super-regional bank implemented new FICO requirements for FHA loans originated via its wholesale channel.  The new minimum FICO for all FHA loans is now 580.  Previously the bank had used "common sense" underwriting with no actual minimum FICO required (although the effective FICO for "make sense" deals was 520). Other banks have rolled in similar higher-FICO guidelines on their FHA deals of late going from a "common sense" overall file risk assessment to more stringent FICO-driven guidelines.   Interesting that as Fannie and Freddie make "feel good" changes to reduce LTV restrictions in declining markets the funnel is being squeezed from another angle with tougher FICO requirements on FHA deals. Here's the (PDF) straight-forward notice from