Fannie Mae requirements are used for a large volume of home loans. At the end of 2013, they applied a few significant modifications to their electronic underwriting program (used to evaluate many of their home loans). Here is an overview of the Fannie Mae electronic underwriting changes released Nov. 2013.
Refinancing Using Home Affordable Refinancing Program
Individuals with a Fannie Mae home loan and refinancing using HARP typically had to use their current lender and go through manual underwriting if they experienced a foreclosure, bankruptcy, short sale, or deed in lieu of foreclosure during the preceding 7 years. Applying for a home loan with a new mortgage company would push the file through electronic underwriting, which required a standard delay for creation of new loans. With the published changes, the set waiting period will be overlooked, enabling individuals with Fannie Mae home loan to refinance using HARP with any lender.
3% Down Loans
Previously, Fannie Mae home loans were permitted with a minimum down payment of 3%. This is no longer allowed. The new requirement is 5%. Minimum FICO scores still apply but can vary for each lender. Lenders may allow a FICO as low as 620.
Handling of Prior History
Many homeowners successfully avoid foreclosure by having a short sale or providing a deed in lieu of foreclosure. Lenders could falsely enter these as foreclosures, which will create problems for individuals who then try and obtain another home loan. Previously, consumers would have to connect with the past company to change the mistake. Under the new electronic underwriting system, a mortgage company can override the data when the loan gets entered into the processed. This makes it simpler for borrowers to obtain new home loans within an acceptable time.
Summary of Fannie Mae Electronic Underwriting Changes Released Nov. 2013
The Fannie Mae electronic underwriting changes released Nov. 2013 include both positives and negatives for customers. The treatment of short sales and deeds in lieu of foreclosure in addition to the HARP refinancing rules will make it less painful for people to obtain for Fannie Mae electronic underwriting changes released Nov. 2013. On the other hand, the increase in the down payment requirements from 3% to 5% will make it harder for some home buyers to save up and afford a home purchase. Even though these are important revisions, there are many other components to the mortgage process that can affect a person’s chances of getting approved. Requirements can also differ with individual lenders. Speak with a local loan consultant for specific information and assistance with your needs. The information in this blog is intended as a general introduction, will change without notice, and should not be construed as accounting or legal advice. For more information, contact Christopher Graves at 978-376-5389 or christopher.d.graves@gmail.com.