New Fannie Mae Regulations

Real Estate Agent with Virtual Homes, Real Estate

If you're a client of mine, you've heard me say this more than once: "No big purchases before closing!"  New Fannie Mae regulations give me new reason to repeat this over and over until you don't even want to look at your credit card!

Fannie Mae's new Loan Quality Initiative (LQI) mandates become effective on June 1st.  So if my no-spending-speech isn't enough, these new mandates will curb borrower's spending prior to closing (or they will risk losing their financing).

The new regulations are an effort by Fannie Mae to tighten up on underwriters and cut down on fraud from borrowers.  As part of the new regulations, lenders will, amoung other things, be required to pull two credit reports.  The second credit report close to closing (which is a practice for some lenders currently) could cause a delay in closing, increase in rate or loss of financing all together.

The new program requires VIRTUALLY ALL LENDERS to pull a credit report prior to closing to find out if a borrower has taken on or shopped for new debt between the time of submitting a mortgage application and closing.  That includes applying for new credit cards, in store financing for home furnishings etc...  If when your credit is pulled prior to closing there are numerous new inquiries, applications and the like, your closing may be delayed in order for your lender to further investigate.  That means, don't apply for that home depot card - even if you aren't going to use it yet.


Fannie Mae Guidelines


In addition, if you are tight on your DTI (debt to income ratio) to begin with, any large purchases prior to closing could push your ratio over the edge and derail your closing all together.  I will say it again... don't buy things to fill your house before you own it!


Bottom line is this, the new fannie mae regulations are going to have a big impact on buyers spending habits before closing.  This is the time to be prudent - don't worry, Ethan Allen will still be there next month.

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About the author: This blog is provided by Lori Liveston, a Realtor with Virtual Homes Real Estate. Lori can be reached via email at or by phone at 781-799-9267. Follow Lori on Twitter @loriliveston

If you are thinking of buying or selling your home, contact me today!  I would love to put my enthusiasm, marketing expertise and dedication to results to work for you.

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I service the following towns in Metrowest MA: Waltham, Lexington, Watertown, Billerica, Burlington, Woburn, Newton, Needham, Dedham, Framingham, Ashland, Natick, Hopkinton, Upton, Arlington, Weston, Wayland, Belmont, Concord, Lincoln, Cambridge, Bedford and Winchester.




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Bryan Watkins
LRA Real Estate Group - Mesa, AZ

Yup, Lori, good post. Never never never make a big purchase before the deal is done. Some just think they are immune. then find out they are just like everyone else.

May 27, 2010 05:32 PM #1
Billi Evans
Murney Associates - Springfield, MO

Better to educate before the mistake is made. Good post.

May 27, 2010 06:30 PM #2
Al Raymondi
Ocean View Realty Group in Ormond By The Sea Florida - Ormond Beach, FL
Ormond By The Sea Florida - Home and Condo Sales

Great information Lori.  Thanks for the heads up.  We need to be sure to tell all borrowers about the potential problems they will get into by breaking the don't mess with your credit until after closing rules.

May 28, 2010 02:23 AM #3
Brian Portwood
FW Realty Solutions - Fort Worth, TX

I have always insisted to my buyers that they don't do anything until they close. The stores will still be there when they move in.

May 29, 2010 02:25 PM #4
Joshua Zargari
MJ Decorators Workshop LI staging and home decorating - Lynbrook, NY
MJ Decorators Workshop

Always calculate your spending habits...

Have a great day , and thank you for sharing.

May 31, 2010 11:34 PM #5
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