Seemingly out of the blue, Wells Fargo increased its standard upfront down payment requirement of 20% to 25% for borrowers in Fairfield County Connecticut, effective on home loans made after September 15 2018.

This new standard applies to loans about $601,450 in Fairfield County…and, in Fairfield County, 18% of 2018 purchase loans for single-family houses and condominiums were above Well’s Fargo’s jumbo threshold of $601,450.

The average mortgage in Fairfield County, according to ATTOM Data Solutions, is $415,289, almost double that of other counties in the state of Connecticut. Wells has not changed its down payment requirements for any other county in Connecticut nor has it changed its down payment requirements for any other county in New York State.

Jonathan Miller, president of Miller Samuel Appraisers, said, “There’s no rhyme or reason for the underwriting standards to be different in Fairfield. The only thing I can think of is they (Wells Fargo) are worried about what’s happening in Hartford rather than what’s happening at a specific property level.”

True, Hartford is facing a $4.5B deficit in the next two-year budget cycle. True, the economic recovery bypassed Connecticut. And true, the state’s economy has contracted every year but one since the recession.

But, Fairfield County has seen the median price of homes that changed hands rise +3.7% in Q3 2018, according to Douglas Elliman and Miller Samuel. Transaction contracts jumped 18% in Q3 2018. And, sales in the town of Greenwich in Fairfield County surged +26% in Q3 2018, the best summer for that market since 2012.

According to Jennifer Leahy, a broker with Douglas Elliman Real Estate in Fairfield County, Well Fargo’s “…new underwriting rules threw all of off…because those rules really affect the deals.” Leahy had a couple who had been approved for a 20% down payment on a Fairfield and then the rules changed. “They had to scramble around to get the extra cash for that newly required 25%. They were finally able to come up with the money but not every client is able to do that. Yes, this new 25% down payment requirement expressly for homes in Fairfield County definitely affects deals.”

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