Mortgage and Lending with Tropical State Mortgage (TropicalStateMortgage.com)

Lender Now Required to Repull Credit Before Closing – As of June 1, 2010, Fannie Mae has now made it a requirement for all lenders to Repull Credit before closing to ensure that the updated information matches the information initially taken on the loan application. The “Loan Quality Initiative” directs all lenders to re-underwrite the loan if material differences exist. For example, if a new credit report is pulled and, it is discovered that a new loan or debts exist; lenders will be required to re-underwrite the loan and take into account this new debt information. If the new debt somehow disqualifies the individual, the loan will be DENIED and the closing will not happen. Another example would be if the borrowers’ credit score dropped under the minimum and new debts appear. The lender would have to DENY the loan. Fannie Mae still claim that a credit report is good for 90 days from the time it is first pulled for underwriting purposes BUT this will not apply if material changes occur before closing. This can, and will be, a HUGE problem for many realtors and borrowers. Additionally, Fannie Mae will require all parties to the transaction be checked against the “excluded party” lists, which are managed by HUD and by the General Services Administration. These federal lists cover a broad array of risk categories, including fraud, gross negligence, and lack of business integrity. Individuals have been placed on these lists for both mortgage-specific and non-mortgage-specific activities. Government loans have always used the GSA list to exclude anyone included. This will not impact most borrowers. Those borrowers who are on the list are aware they are on the GSA list. It is VERY important that the borrower is correctly underwritten, approved and counseled by a knowledgeable loan professional throughout the mortgage process. The lending market has become very complex and very strict. Akali Dennie and Freedom Mortgage lends in all 50 states and would be happy to assist any borrower or realtor through the mortgage process. Akali can be reached at adenine@fmbranch.com for any additional questions.

Comments (4)

Ellen Dittman
Watson Realty Corp. - Middleburg, FL
#1 Stop for NE FLA-JAX/OP 904.535.1199 (TEXT OK) r

Sound like a list you would not want be on.

Jun 13, 2010 05:50 AM
Juli Vosmik
Dominion Fine Properties - Scottsdale, AZ
Scottsdale/Cave Creek, AZ real estate 480-710-0739

I applaud FNMA for using the HUD lists - one step in stopping the rampant mortgage fraud that is still occurring.  As to the second credit report, I think that will have to still play itself out - how broad of a change?  If buyers shopped for mortgages and had numerous credit reports pulled, that will pull down the FICO.  Very important to advise your clients NOT TO allow their credit pulled just when they are checking out rates and upfront fees.  Once they have determined which REPUTABLE lender to go with, then, and only then, have them pull your credit.  That way, the hits for multiple credit reports won't affect your FICO and chance for finally closing.

Jun 13, 2010 05:52 AM
Akali D.
Tropical State Mortgage (TropicalStateMortgage.com) - North Miami Beach, FL
FHA Loans -- FHA Mortgages -- TropicalStateMortgage.com

Yes.  I too applaud FNMA for these guidelines.  The KEY is to make sure a complete and accurate loan application is taken initially and COUNSEL your borrowers to NOT repull their credit for ANY purpose until the deal is closed.  Also, the initial loan officer would have to make sure he asks if any PENDING loan applications for ANYTHING exists.  Please note that when a new credit report is pulled just before closing, and nothing has changed except the credit score by a few points, this is not necessarily a case to DENY the file.  The initial credit report and underwriting findings are valid for 90 days as long as ACCURATE information was supplied initially.  Thanks for all the comments as this will be a HUGE issue in the coming months.

Jun 13, 2010 05:59 AM
Beyonca Clark
Century21 New Millennium - Lusby, MD

Good information. Thanks, will be re-blogging your message.

Jun 13, 2010 11:07 PM