Fannie Mae is imposing strict new lending guidelines that should slow down purchase and refinance activity in Cincinnati and parts elsewhere.
In a public announcement, Fannie Mae defends its pending changes, citing high levels of unemployment, a surge in mortgage fraud, and general market fluctuations.
It's the first major conforming mortgage guideline change since April and this one is a big one -- 15 separate underwriting areas are affected.
Are sampling of the across-the-board guideline changes includes:
By themselves, these bullet points would kick a bevy of home loans from the underwriting queue. Waiters can no longer claim tip income; relocating families can't use both spouses' income. But of all the changes Fannie Mae is making, the biggest deal may be its new restrictions on home loans tied to 2-unit properties.
Until now, Fannie Mae had viewed 2-units homes as "safe", assigning them the same liberal underwriting policies as for a single-family home. Today, not so much.
Refinancing owners and new buyers of 2-unit homes now face higher minimum FICO requirements and lower maximum LTVs.
Using your 2-unit as a Primary Residence:
Using your 2-Unit as an Investment Property
Fannie Mae's new 2-unit guidelines restrict loan-to-value and raise FICO minimums by up to 15 percent and 40 points, respectively. Because of it, fewer 2-unit mortgage applicants will qualify for mortgages.
This should slow purchase and refinance activity in the 2-unit market.
Meanwhile, Fannie Mae's changes aren't in place just yet -- September 1, 2009 is the "effective date". So, if you have a 2-unit home to refinance or purchase, consider getting a move on. You don't have to be closed by September 1 -- you just have to be in underwriting.
to find out more about Fannie Mae's changes and how it might impact your pending mortgage approval. You can also ask me to to get in advance of the changes.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
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2017 Conforming, FHA, & VA Loan Limits
Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)