UWM drops minimum credit score overlay for agency loans

United Wholesale Mortgage (UWM) is removing its minimum credit score overlay for agency loans, the company announced Wednesday morning. The change, effective immediately, applies to conventional loans backed by Fannie Mae and Freddie Mac, as well as FHA, VA and USDA loans backed by Ginnie Mae. Instead of requiring a minimum credit score, the Pontiac, Michigan-based wholesale lender will use automated underwriting system (AUS) decisions to determine borrower eligibility. Credit scores will continue to be used for pricing, including agency loan-level price adjustments (LLPAs), but will no longer be a minimum eligibility requirement for UWM’s agency products. “A credit score is definitely part of the story, but it doesn’t tell the whole story,” Mat Ishbia, UWM’s president and CEO, said in a statement. “Over the last year, we’ve taken a deep dive into the relationship between credit scores, borrower approvals and loan performance.” Ishbia said that the company found that credit scores are an important indicator but are not the strongest predictor of whether a borrower will qualify for a loan. “AUS delivers a much more complete assessment by evaluating numerous factors across a borrower...