New Rule Makes for Bumpy Ride to the Closing Table
This is really BIG news; new rule from Fannie Mae called the Loan Quality Initiative (LQI)!
What it means is that in addition to “underwriting conditions” that may be required from the underwriter to close the loan, the loan must now be “audited” by a quality control person to double-check the underwriter. Yes, the loan will be "underwritten" twice—and not at the same time either!
Here are some of the things they’ll be checking for:
Borrower Identify Income Calculations Employment
Source of Assets Appraisal Review MI Coverage
While this does not go into effect until July 1, 2010, lenders have started to implement the new procedures now.
Here’s what to expect:
- Loan will be underwritten 2 different times
- There may be two sets of underwriting/closing conditions
- New credit report pulled prior to closing
The bottom line: As if the waiting periods for the GFE, MDIA and HVCC were not enough, expect delays and new requirements. Be calm—it is a federal rule and there is nothing you can do about it. More importantly, warn your clients (and I will, too) of the potential that they may be required to submit more documents, right up until minutes before closing.