Wells Fargo & Co. is tightening underwriting standards today in more than 200 markets it has identified as distressed or soft, increasing down-payment requirements and making stated-income loans off limits in some markets.

The new guidelines require 5 percent loan-to-value (LTV) reductions on conforming loans in which the LTV exceeds 75 percent, and bar nonconforming loans with LTVs above 75 percent, according to the blog Blownmortgage.com, which obtained a copy of a Feb. 25 memo to brokers.

BlownMortgage.com said the memo identified more than 30 California markets as at-risk.

Reuters reported that the memo identified 33 at-risk markets in Florida, 15 each in Michigan and Virginia, and 13 each in Maryland and Ohio.

Underwriting standards are also being tightened in markets in Arizona, Colorado, Connecticut, Washington, D.C., Illinois, Louisiana, Massachusetts, Minnesota, Missouri, Nevada, New Hampshire, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Washington, Wisconsin and West Virginia, Reuters reported.

A Wells Fargo spokesman did not dispute reports of the changes, but declined to provide a copy of the memo. Wells Fargo issued a statement on the changes, saying the company provides “consumers with a wide variety of options for becoming successful homeowners.”

The statement said Wells Fargo is focused “on fair and responsible lending and sound credit risk management. We’re making day-to-day decisions on products and channels that are consistent with the needs of our customers, with appropriate returns and risks, and with our long-term prudent business practices.”

Government-chartered mortgage financers Fannie Mae and Freddie Mac have increased surcharges for borrowers with credit scores below 680 and are requiring down payments of at least 5 percent on all loans in declining markets. (see story).

Private mortgage insurer PMI Group Inc. has announced that as of March 1, it will no longer insure loans in which borrowers make down payments of less than 3 percent (see Inman News story). MGIC Investment Corp. is discontinuing coverage of loans with down payments of less than 5 percent in 30 markets where prices are falling (see story).

MGIC’s list of restricted markets includes four entire states — California, Florida, Arizona and Nevada — and 26 markets in 18 other states where home prices are falling.

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