LENDERS NOW REQUIRED TO REPULL CREDIT BEFORE CLOSING? TRUE! FANNIE MAE'S GRIP TIGHTENS

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.