+1, so it would be the lending industry that would raise their minimum score requirement as a overlay to what FHA's minimum score requirement is. The industry has no problem doing this as conventional loans that are on their dime require a 680 score and even that sometimes isn't good enough. But since they still aren't liable for FHA loans, they will want to balance score requirements with profitability. You don't want the score so high that it blocks the majority of buyers out the market.
The reason the manual underwriting accompanied with justification is so bad is because if a LO puts in justification for someone who has a 580 score to obtain a mortgage and if that person ends up defaulting on their loan and foreclosure proceedings begin, who is the government going to point to...the LO! So they don't want that smear on their career.
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