Good afternoon,
Here are the new changes being released on Saturday. Please let me know if anyone has any additional questions or you can contact Fannie Mae's customer service division at 1-877-722-6757.
Michael Savas-
REMINDER - Effective with new loans submitted to DU on or after May 19, 2007
Underwriting/DU
- HomeStay Initiative
- Due to changes in the subprime market, Fannie Mae has introduced the HomeStay Initiative which has been developed to help lenders bring stability to the market and help borrowers refinance so they can stay in their homes. The HomeStay Initiative is not a new product, but an adjustment to credit standards. This adjustment will allow HomeStay targeted loans to be originated under a more suitable product.
- The HomeStay Initiative will result in:
- Allowing borrowers that were previously limited to subprime products to be eligible for Expanded Approval products.
- Approval of some loans to which collections and charge offs are not required to be paid off.
- Outstanding collections (collections and charge offs) are not required to be paid off, regardless of the amount if:
- One-unit property, owner occupied
- Collection will not threaten the first lien position
- DU should require payoff, sufficient funds to settle the account(s) must be verified and documented
- DU will still consider the presence of collections in the risk assessment
- Applicable also for resubmissions
(previously, >$5,000) must be paid at or prior to closing) - Tightened credit standards for EA loans in DU for all loans with a considerable layering of risk (i.e., high CLTV where the borrowers have had significant credit problems in the past). Due to credit standards adjustments, certain high-risk loans that previously received an Approve, Refer, or EA I, II, III may receive a more conservative recommendation.
- Tightened credit standards in My Community. Due to the credit standards adjustments, some My Community loans may no longer be eligible, but could be eligible as a Flex or an EA recommendation. This is necessary to prevent My Community from being used by borrowers for which it was not intended.
- Development of certain components of the Initiative is ongoing and expected to be implemented this summer.
- The Fannie DU enhancement announced in April 2006, which allowed certain borrowers with income at or below HUD's Area Median Income to receive an improved recommendation, is no longer available.
My Community Fixed and ARMs
REMINDER - Effective with new loans submitted to DU on after May 19, 2007
Underwriting/DU
- Minimum Credit Standards
- Loans that do not meet minimum credit standards in DU and have considerable layering of risk will receive an "Ineligible".
- These changes are a result of the HomeStay Initiative.
- DU will return the following message:
- This case is ineligible for delivery as a My Community Mortgage loan because it does not meet the specific minimum credit standards for MCM. The lender may remove the MCM product selection and resubmit the loan to determine if the loan is eligible outside of My Community Mortgage.
- Due to the credit standards adjustments, some loans may no longer be eligible for My Community, but could be eligible as a Flex or EA recommendation.
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