Recent Fannie Mae Underwriting Changes

Fannie Mae has rolled out its latest underwriting changes, effective December 11th. Most of the changes are fairly minor but, surprisingly, a few are more lenient including the first two listed below. Here is a summary of a few of the changes worth noting:





In the past on a Conventional loan, if the borrower received a gift, the borrower still had to come up with at least 5% from their own funds unless the borrower put 20% or more down. Moving forward, all funds can come from a gift even if the borrower puts less than 20% down! This is an amazing development that will help more people get Conventional financing. Gifts are not allowed on investment property purchases, so this rule does not apply on this property type.

Pay Stubs.

Foreclosures. In the past when obtaining a new mortgage, the waiting period that must elapse after a borrower experiences a foreclosure is seven years. However, Fannie Mae allowed a shorter time period – five years – if certain additional requirements were met (e.g., minimum down payment, credit score, and occupancy requirements). These requirements have now been modified to remove the five year option. Moving forward, all borrowers will now be required to meet a seven-year waiting period after a prior foreclosure before being eligible to obtain a new mortgage.



Self-Employed Borrowers.



These are just a few of the changes in the most recent Fannie Mae manual update, but the most significant worth noting.  Fortunately, there is some good news mixed in with this round of changes.  Lets hope this is a trend that continues….


January 7, 2011 by · Leave a Comment

About James

James A. Williamson is currently the Sr VP of Sales Development for Shelter Lending Services (formerly Fairfield Mortgage). James joined Shelter in 1994 and was the company's top Loan Officer in GA for 20 straight years helping over 2500 families finance their homes. James now oversees an incredible group of Loan Officers in Atlanta while further building Shelter's Atlanta business.

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