Lending Guides and The “Loan Quality Initiative”
It’s on. Fannie Mae has put into effect their Loan Quality Initiative in order to prevent bad loans to happen. For home buyers and refinancing owners this will mean tougher times to secure a new loan. Does it sound familiar?
Fannie’s Loan Qualify Initiative took effect on July 1st of 2010 and lenders are now scanning files with even bigger and better lenses. The focus this time is on new, non-disclosed debt and lender most likely will be pulling your credit just before closing. The bank’s underwriter will be looking at 3 main things in particular, even after you get a loan approval.
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A new updated credit report will be pulled and the new numbers will be replacing the original ones from your loan application. If new debt exceeds a determined threshold, you loan could be denied
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Any changes on your FICO scores could prevent you for securing the loan. If your qualifying score (mid of three scores) has dropped below lending minimum standards, you could be subjected to a rate adjustment or your loan could be denied.
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Your credit inquiries will be checked in order to determine if you’ve been applying for more credit elsewhere. They will use this information at their discretion.
It’s important that you take care of your credit. Make sure you don’t make any changes on your credit between the time you applied for a loan and the time you hold the keys to your home or close your new loan on a refinance. In these days, a loan can be revoked right before closing and I’m sure you wouldn’t like to be the one to experience that.
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