Yikes! Fannie Mae is Cracking Down!

By
Real Estate Mortgage Broker with The Mortgage Experts at America's Mortgage

There are some new rules going into effect shortly that will have an enormous effect on some mortgage transactions. Here's the biggest one:

Effective for all loan applications dated June 1, 2010 and later, Fannie Mae is "requiring lenders to determine that all debts of the borrower incurred or closed up to and concurrent with the closing of the subject mortgage are disclosed on the final loan application and included in the qualification for the subject mortgage loan."

Here's what it means. If a borrower opens a new account or increases the balance on an existing account between the time of application and the closing, the new debt has to be included. The best case is that the closing gets delayed. The worst case is that the borrower no longer qualifies for the loan and the deal is dead.

Fannie Mae provides the following "tips for lenders to consider" when attempting to find undisclosed liabilities. That's Fannie Mae Speak for "Do these things or else!"

- Refreshing a credit report just prior to closing may uncover additional debt or credit inquiries.

- Credit inquiries found on the credit report should be investigated to determine whether the borrower did in fact open additional debt resulting in repayment obligations. In some cases, it is possible to obtain a direct verification with the creditor associated with the inquiry.

- Fraud-detection tools are available through multiple vendors that assist lenders in identifying undisclosed mortgages or other potentially fraudulent scenarios.


Fannie Mae is not requiring these things until June 1, but lenders are allowed to implement them earlier. Many lenders probably will.

Be prepared! The mortgage industry has changed and continues to change. Being in the industry for 20 years means nothing if you don't stay up to date with all the changes. If your current lender has not already told you about these new rules, ask him why he hasn't. Maybe it's time to change lenders.

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Re-Bloggged 7 times:

Re-Blogged By Re-Blogged At
  1. Mirela Monte 03/04/2010 06:26 PM
  2. Lew Corcoran 03/04/2010 06:30 PM
  3. Donald Bradbury 03/04/2010 08:31 PM
  4. Kari A. Battaglia 03/04/2010 08:58 PM
  5. Roland Woodworth 03/04/2010 11:15 PM
  6. Damon Gettier 03/05/2010 09:39 AM
  7. Wendy Cutrufelli 03/05/2010 10:24 AM
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Topic:
Lending / Financial
Location:
Colorado
Groups:
Colorado Real Estate
Colorado Realty Bloggers
Colorful Colorado
Mortgages
Realtors Needing the services of the Lending Powers
Tags:
mortgage tips
fannie mae
liabilities

Comments 81 New Comment

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Rainmaker
144,488
Kathy Opatka
Serving Ocean City, MD, & The Delaware Beaches
RE/MAX CROSSROADS

Chris,

I think we need to tell our clients.... "Do not spend a penny, until your loan closes! No new cars, furniture, jewelry, etc. until you walk away from the settlement table!"

March 05, 2010 03:18 PM
Ambassador
436,773
Paul McFadden
Mortgage Loan Officer, Bellevue Washington Home Lo
Alaska USA Federal Credit Union

Chris: Thanks for the update. Things aren't getting any easier that's for sure!

March 05, 2010 06:04 PM
Rainer
24,490
Dawn Coulter
e-PRO, One America
Century 21 Covered Bridges Realty, Inc.

Loverly...

This will make it even more difficult for many of our buyers to get these loans that have been labeled as "ideal" for many due to the fact that they were eligible for loans. 

As another reader stated, "another day, another rule"....so true indeed!!!!

March 05, 2010 08:46 PM
Anonymous #80
Anonymous
Nick Pakulla

Thanks Chris.  This is for sure going to be a fun ride!

March 06, 2010 05:19 PM
Rainmaker
341,943
Don Wixom
"Looking out for your next move..."tm
RE/MAX Advantage Nampa, ID

Chris, thanks for the post!  Good information.  I just had a buyer become unqualified a week before closing.  He paid off a couple credit cards & they both pulled new reports to determine the remaining line.  His score dropped 8 points below eligibility.  Wow!

March 07, 2010 06:33 PM
Anonymous
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Rainmaker
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Chris Thomas

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