Just when you though it might be getting easier to qualify for a home loan, Fannie Mae and Freddie Mac (aka “The Grinchs”) are implementing TIGHTER qualifying guidelines for their loans.
Beginning the weekend of December 12th, both Government Sponsored Enterprises (GSEs) are rolling out new versions of their Automated Underwriting Systems. To give you a taste of “why?”, here’s sentence from the Fannie Mae announcement:
“We are implementing these changes to help ensure that our guidelines reflect and appropriately respond to the current market conditions, and that we continue to provide sustainable home ownership opportunities to borrowers.”
In a nutshell, choke off some “riskier buyers” buy tightening qualifying guidelines ! The single biggest change will be (again quoted from the Fannie Mae Release):
“An updated to the maximum allowable total expense (debt-to-income) ratio to 45%, with flexibilities up to 50% for certain loan case files with strong compensating factors” (accents placed above be me!).
Maybe this is a good thing, that of limiting DTI ratios to 45%, but I estimate this may choke off approx 20% of currently prospective home buyers (from here-on forth they shall be called “wanna-bes”). At best, the timing of this change is horrible since the “first time home-buyer” and “move-up home-buyer” credit programs have been extended through 6/30/2010 (with contracts ratified by 4/30/2010). Talk about the left hand not knowing what the right hand is doing??? Santa’s putting a lump of coal in their stockings for sure!
To get the latest news, call Todd Abelson & Tyler Ford at Sunstreet Mortgage in Tucson, AZ
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