Blog

Changes are always happening in the mortgage industry! According to Fannie Mae, the changes “will help lenders serve their borrowers with simpler, more certain underwriting guidelines and fewer manual processes.” Here is what is coming down the pipe:

• Debt to Income simplification – The maximum allowable debt to income will be changed to 50%. Previously compensating factors were needed to go above 45%, but this is no longer.
• ARM enhancements – Currently the maximum allowable loan-to-value (LTV) is set at 90% for a purchase transaction on a primary and secondary residence, 75% on a purchase of a 2 unit primary residence, cash-out refinance on a 1 unit, purchase of a 1 unit investment property. The new guidelines will be set to match the fixed rate guidelines up to 95% LTV.
• Disputed tradelines – The update to the Fannie Mae system will assess the risk of using any disputed tradelines and lenders will no longer be required to investigate the disputed tradeline if the loan casefile gets an Approve recommendation.
• Simpler self-employed borrower documentation requirements – Fannie Mae will soon simplify the tax return documentation requirements for many self-employed borrowers. The number of Fannie Mae loans eligible for the one year (instead of two years) of personal business tax return documentation requirements will increase.