New Fannie Mae (Conventional loan) Guidelines

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Mortgage and Lending with Mason-McDuffie Mortgage, Conventional Loans, Jumbo Loans, FHA, 203(k), USDA, VA, NMLS #138061 MMCD #1141
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New Fannie Mae (Conventional) Guidelines

 

 

     Fannie Mae has announced some changes to their conventional lending guidelines, effective immediately.  This is a welcome announcement as the changes make underwriting guidelines more clear, and in some cases more lenient.  They also improve pricing for certain borrowers.  Have you had Fannie Mae Guideline Changesbuyers turned down over the past 6-12 months because of these guidelines?  If so, it's time to pick up the phone and see if they can qualify for a new home loan.

 

Keep in mind, these are Fannie Mae changes, and not lender-specific changes.  That means if your lender is not Agency-direct, you may run into delays with implementation or a lack of implementation of the following guidelines.  For this reason and many others, if you're not working with a lender that is agency-direct, you should be.

 

1) Debts paid by other parties

If a non-mortgage debt is paid by someone not applying for the mortgage loan, we can exclude that debt from debt/income ratios with evidence of the payment history.  Previously, we had to prove that our borrower was not obligated on the debt (in case of default).  This loosens up guidelines on which debts can be excluded, and should help a ton of people.  Some examples are:

 

- People who opened accounts for friends/relatives with poor credit, but those friends/relatives make payments

- Parents who cosign student loans or car loans but their kids pay them

 

 

2) Student Loan Refinance

If a cash-out refinance is used to pay off student loan debt, there are now no pricing hits or changes for cash-out refinancing.  Pricing will be the same as rate/term refinances.  In the past, regardless of which types of accounts were being paid off (with the exception of purchase money 2nd mortgages), there was an increase to interest rate (sometimes a steep one) for cash out refinances.  Now, provided the loan is just to pay off student loan debt, there will be no rate adjustment.  

Note** This program cannot partially pay off a student loan.  It has to pay the student loan in full

 

 

3) Less condo restrictions on refinances

Condo project approval is no longer required if:

 

- LTV is 80% or lower

- Project insurance is adequate and in compliance with Fannie Mae guidelines

- No time shares, segmented ownership, condotels, or houseboat projects

 

 

4) No seasoning on listed properties for cash out refinances

Previously, a listing had to be cancelled for 6 months before an owner could cash out to the max cash out limits of 80% LTV.  Now, there is no waiting period, we just have to show the listing was cancelled.

 

 

5) Student loan debt calculation changes

 

Lenders can now use the student loan payment shown on a credit report, OR if a credit report doesn't have a payment, 1% of the loan balance or a fully amortized payment based on repayment terms.  This will be nice for people with lower negotiated payments than 1% of the loan balance if they're shown on credit.  

 

     While these aren't huge changes, I can think of recent applications that would have been effected by at least one of the above.  The biggest one will be the change to debt/income calculations when debts are paid by non-borrowers, but all of these moves are a step in the right direction toward loosening the reigns on underwriting and moving to more common sense standards.

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Ritu Desai 04/26/2017 05:26 AM
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Rainmaker
506,782
Francine Viola
Coldwell Banker Evergreen Olympic Realty, Olympia WA - Olympia, WA
REALTOR®, In Tune with your Real Estate Needs

I'm so glad I saw this post...I was just talking with another agent about item #4!

Apr 25, 2017 05:36 PM #3
Rainmaker
1,317,376
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

Thanks for keeping us up to date on these changes.  They can make a big difference to some borrowers.

Apr 25, 2017 08:29 PM #4
Rainmaker
2,692,927
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

Thanks for the new guidelines. You never know when one might need them. Good post! 

Apr 25, 2017 11:11 PM #5
Rainmaker
1,331,455
Kat Palmiotti
Grand Lux Realty, Monroe NY, 914-419-0270, kat@thehousekat.com - Monroe, NY
The House Kat

These all sound like helpful changes for buyers. Thanks for sharing.

Apr 26, 2017 03:26 AM #6
Rainmaker
857,267
Elyse Berman, PA
Best Connections Realty, Inc. - Boca Raton, FL
Boca Raton FL (561) 716-7824 CRS, ABR, GRI,ePR

John Meussner Great information in easy-to-understand language.  Thanks for sharing this information.

Apr 26, 2017 03:34 AM #7
Rainmaker
2,377,462
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

Great information about new Fannie Mae and conventional loan guidelines, John.

Apr 26, 2017 03:34 AM #8
Rainer
174,397
Kim Knights
RE/MAX Bay to Bay - Tampa, FL

Good information.  Thank you.

Apr 26, 2017 04:08 AM #9
Rainmaker
1,458,248
Beth Atalay
Cam Realty and Property Management - Clermont, FL
Cam Realty of Clermont FL

Good morning John, thanks so much for sharing these important changes with us, we could always count on you!

Apr 26, 2017 04:33 AM #10
Ambassador
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Joe Pryor
The Virtual Real Estate Team - Oklahoma City, OK
REALTOR® - Oklahoma Investment Properties

Good news and thanks for sharing. It is good to see some lessened restrictions.

Apr 26, 2017 05:01 AM #11
Rainmaker
3,692,852
Dorie Dillard CRS GRI ABR
Coldwell Banker United Realtors® ~ 512.750.6899 - Austin, TX
Serving Buyers & Sellers in NW Austin Real Estate

Good morning John Meussner ,

So glad to see these new guideline's implemented immediately. I appreciate the heads up..inching and taking steps in the approval process that makes more sense!

Apr 26, 2017 05:24 AM #12
Rainmaker
2,379,330
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

The mouth of the Loan Officers horse speaking...aka the horses mouth here

Apr 26, 2017 06:14 AM #13
Rainmaker
1,493,210
Gary L. Waters Broker Associate, Bucci Realty
Bucci Realty, Inc. - Melbourne, FL
Fifteen Years Experience in Brevard County

Nice to know information.  Loan officers who know their stuff are critical.... as opposed to the loan officer who told my client yesterday no survey was needed unless the title company asked for one!

Apr 26, 2017 08:11 AM #14
Rainmaker
2,870,916
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of Manchester NH's Leading Agents

Those will all help John Meussner , thanks for the updates

Apr 26, 2017 08:29 AM #15
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

John I got notice of these changes yesterday.  The change to debts paid by other parties, and the calculation of the student debt is going have a significant impact in my opinion.  Finally we are starting to see changes in a positive direction.

Apr 26, 2017 08:59 AM #16
Rainer
18,062
Mike Tizzano
LHM Financial DBA CNN Mortgage - Scottsdale, AZ
Full Service Mortgage Bank

This is where loosening of the guidelines makes sense.  Theoretically an IBR payment on a student loan payment would only increase if the borrower's income increased.  I understand that they have to renew the IBR annually but most people utilizing IBR go through with the renewal.

Apr 26, 2017 09:11 AM #17
Rainer
258,429
Mick Michaud
Distinctly Texas Lifestyle Properties, LLC Office:682/498-3107 - Granbury, TX
Your Texas Lifestyle is Here!

Thanks for the heads-up.  Nice to see someone is starting to get a little more realistic in underwriting guidelines.

Apr 26, 2017 10:20 AM #18
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Dick Greenberg
New Paradigm Partners LLC - Fort Collins, CO
Northern Colorado Residential Real Estate

Hi John - Thanks for the update. Those all look like they will be helpful to our borrowers.

Apr 26, 2017 12:59 PM #19
Rainer
106,218
Christine Kankowski North SD and Temecula
House Match Inc - Poway, CA
Excellent Sales and Property Management

Great info. THanks for posting.   Rules change so quickly and often I rely on the wisdom of lenders like you. THanks, 

Apr 26, 2017 01:29 PM #20
Rainer
470,590
Dörte Engel
RE/MAX Leading Edge - Bowie, MD
ABC - Annapolis, Bowie, Crofton & rest of Maryland

Dear John,

Great changes for those, who are a little challenged, but otherwise good borrowers.

Apr 26, 2017 09:19 PM #21
Rainmaker
380,370
John Wiley
Right Move Real Estate Group- EXP Realty - Fort Myers, FL
Lee County, FL Real Estate GRI, SRES,GREEN,PSA

John, this is great information for us to know. Often we are looking for a way to get  some folks qualified and knowing which lender has the product that will get the deal done is so valuable.

Thanks 

Apr 27, 2017 12:44 PM #22
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