Changes to Fannie Mae and Freddie Mac

By
Real Estate Agent with TIM LORENZ - Elite Home Sales Team DRE# 00919781

Fannie Mae and Freddie Mac Changes

The last thing anyone wants is to have a problem with getting a home loan after the loan contingencies have been removed. Due to recent changes by Fannie Mae and Freddie Mac problems may now begin to happen.

The two mortgage giants, who buy the majority of mortgages from lenders, have now required lenders to be more diligent reviewing inquiries that show up on buyer's credit reports. This would include inquiries before and after the loan application has been taken and escrow opened.

Fannie Mae is requiring lenders to check the buyer's credit right before closing. If any inquiries appear on the report, the lender is required to document if new payments are being made or credit has been extended to the buyer. If the buyer has increased credit card balances or bought a new washer and dryer or furniture for the new house then the loan is required to be re-underwritten. These new debts will increase the borrower's debt-to-income ratios potentially disqualifying them for their home loan.

Freddie Mac, effective February 1st, requires the lenders to inspect all previous inquiries on the credit report for 120 days prior to the application. The logic is any new debt taken out buy the borrower may not have shown up on the credit report so Freddie Mac wants each inquiry checked out and verified to make sure no extra debt and payments are outstanding.

When you have a client you are preparing to buy a home, remind them to not take any new debt until after their home loan has closed.

  

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Rainer
41,756
Art Hademan
Century 21 Real Estate Center - Mount Vernon, WA

Oh well Tim.

Gotta keep an eye out for all those unqualified buyers who can't afford to buy a home!

We can't afford to let them slip through the cracks again.

Gawd, big government sucks!

When will we ever learn?

Feb 07, 2011 06:26 PM #1
Rainmaker
388,669
John Walters
Frank Rubi Real Estate - Slidell, LA
Licensed in Louisiana

Tim isn't a shame they weren't this diligent in the first place?  Americans always paid their mortgage until they didn't.

Feb 08, 2011 12:48 AM #2
Rainmaker
1,024,997
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Art

Yea we do want to screen well but this is overkill.

Feb 08, 2011 06:00 AM #3
Rainmaker
1,024,997
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

John

As I just said to art it is important to have a buyer that is able to pay.  It is not all Americans that did not pay and when you have high unemployment people cannot pay.

Feb 08, 2011 06:02 AM #4
Ambassador
2,304,554
1~Judi Barrett
Integrity Real Estate Services 118 SE AVE N, Idabel, OK 74745 - Idabel, OK
BS Ed, Integrity Real Estate Services -IDABEL OK

Tim,

It actually makes good sense to me for them to make sure that the borrower is in the position that they think he is financially before he signs on the line. 

Borrowers need to understand the significance of any new debt they take on in the interim after being qualified for their home mortgage.

Great information  here. 

Why do you call you it overkill?

Feb 10, 2011 12:48 PM #5
Rainmaker
1,024,997
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Judi

The problem we are having is not the fault of the credit check.  If proper credit check and proper standards were used when lending to individules when they wanted homes we would never have had a mortgage meltdown.  Instead, after the problems because of loose standards we need two credit checks one just before close. 

We are trying to take and place all the blame on the home buyer and not on the banks and the government for their lack of standards. 

Feb 10, 2011 05:11 PM #6
Rainmaker
150,675
Virginia Gardner
Roy Wheeler Realty Co. - Charlottesville, VA
Realtor, Charlottesville, Serving Central Virginia

This is good advice to buyers, something we've (Realtors, collectively) been providing buyers as long as I've been in the real estate business: decide what's important, owning a home or buying a new car.  If the home is more important, drive the clunker and close on your house, because if you go on & buy the new car, you may be living in it. :-)

Feb 11, 2011 12:25 AM #7
Rainmaker
1,024,997
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Virginia

It does make sense when you put it that way.

Feb 11, 2011 01:39 AM #8
Rainmaker
1,080,379
Sharon Alters
Coldwell Banker Vanguard Realty - 904-673-2308 - Fleming Island, FL
Realtor - Homes for Sale Fleming Island FL

Wow, re-underwritten? This is extreme - but like you say, the pendulum swings the other way...thanks for the heads up, Tim.

If the buyer has increased credit card balances or bought a new washer and dryer or furniture for the new house then the loan is required to be re-underwritten.

Feb 12, 2011 04:00 PM #9
Rainmaker
1,024,997
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

It is the change that is radical because it changes the way loans have been done in the past.  If you had bought 4 homes this has never been the way for you.  You purchase some things for the home and that will stop you from getting the new home now.

Feb 12, 2011 05:07 PM #10
Rainer
257,027
Maria Couto
RE/MAX Premier - Berkeley Heights, NJ
Realtor with "Results That "MOVE" You'

Good advice Tim. I have always warned my clients, once they have their commitment, not to go out and start charging new furniture for the new home. Lender in Jersey always check day of/or before closing if new debt as been incurred.

Feb 12, 2011 07:13 PM #11
Rainmaker
1,024,997
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Maria

It is especially important to get it right now that everyone is checking.

Feb 13, 2011 01:43 AM #12
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