Important Changes to new Fannie Mae Loans

On December 12th 2009 Fannie Mae will make some changes to the underwriting of many loans. Fannie Mae will now require a minimum of 620 FICO score for all borrowers. This will have a little impact on business since we have been helping our borrowers increase their credit score to 640 and above in order to receive better pricing. The major change will affect the maximum debt to income ration. The debt ratio will now be limited to 45% for the borrower’s gross income and for strong borrowers this will be expanded to 50%. Before, Fannie Mae has allowed ratios that were much higher. These changes go into effect for all new loans that are approved through using DU/DO automated findings. It is very important that all borrowers who are looking at buying or refinancing and have high debt to income rations contact their loan officer and get pre- approved before the 12th to insure they receive the finding before December 12th.
Realtors, this is a perfect time to remind your buyers who are on the “fence” that these changes could affect their buying ability. Loans under the old findings will need to be closed before January 30, 2010. Please contact your loan officer to learn about the other changes that go into effect on the 12th.