President Donald Trump made headlines with his controversial proposal to make housing affordable by introducing 50-year mortgages. While that plan was merely floated—and may not even be legal—the administration has laid the groundwork for another housing bubble by eliminating the minimum FICO score requirement for federally-backed home loans.
Last Wednesday, Fannie Mae announced that "the minimum representative credit score requirement of 620…will be removed for new loan casefiles created on or after Nov. 16." Fannie Mae, a government-sponsored enterprise (GSE), doesn't lend to borrowers directly, but purchases mortgage loans from private lenders like commercial banks. Together with Freddie Mac, another GSE that buys mortgages, the two "support around 70 percent of the U.S. mortgage market," according to The New York Times.
