Posted on 11/26/2009 6:31:42 AM PST by Oldeconomybuyer
WASHINGTON (Reuters) - Fannie Mae plans to raise minimum credit score requirements next month and limit the amount of overall debt that borrowers can carry relative to their incomes, The Washington Post reported on Thursday.
Starting December 12, the automated system that the government-controlled mortgage finance company uses to approve loans will reject borrowers who have at least a 20 percent down payment but whose credit scores fall below 620 out of 850, the newspaper reported. Previously, the cut-off was 580.
Also, for borrowers with a 20 percent down payment, no more than 45 percent of their gross monthly income can go toward paying debts, the newspaper said.
A Fannie Mae spokesman told the newspaper that the limits reflect the company's recent experience.
Loans to people with credit scores below 620 fell seriously behind at a rate approximately nine times higher than other loans purchased in the same period, Fannie Mae spokesman Brian Faith said. Loans taken out by borrowers with lots of debt also suffer higher levels of serious delinquency, he said.
(Excerpt) Read more at reuters.com ...
I’m afraid that horse is already out of the barn.
Should have been this way all along........
Isn’t the horse already out of the barn?
Wow, a little late to the party.
Dollars to donuts the Dems will be highly disturbed that their base voters no longer can borrow too much, live mortgage free and live off hard working Americans .......and vote liberal
it’s the FHA not Fannie that’s the issue!!!
It has been publicized that FHA has been making loans with only 3.5% down, and that many (20%, I think) show signs of defaulting within the first year. Meanwhile, Fannie has come back to the government for more equity, and the FDIC is in the red. Maybe this is just a trial balloon; maybe some of the powers that be are getting "scared straight."
And for borrowers who have a 3.5% down payment, new restrictions...oh wait...we have to keep housing affordable. </sarc>
No, Fannie is the issue. Fannie Mae buys all the mortgages from banks and bundles them into investment securities. When those investment securities were all bundled with subprime loans that caused the economic collapse.
The Democrats allowed Fannie Mae to push banks to lower the lending standards and the banks obliged as long as Fannie Mae would buy the junk (subprimes).
Sub prime loans are being written every day.
LOL....Now there’s a picture worth a trillion words
“I’m afraid that horse is already out of the barn.”
Obviously, from that picture just above.
FHA being the problem, etc.. actually normal default rate for FHA loans has been around 4.5 -5%. That has gone up to about 8%. I’ve been in the business a long time and here are the true reasons:
1. Subprime mortgages - Bandaid loans (1-3 yr ARMs) that ASSUMED the borrower would improve their credit history so they could refi into a regular FNMA, FHLMC loan. Problem- if you aren’t inspired to have good credit anyway, why fix it when someone will give you a house? - BAD LOANS but all loan documents fully disclosed this
2. Option ARMS - A LOT in CA because they were int-only, no payments to principal and if the int rate went up, you could CHOOSE to roll that extra interest payment INTO THE PRINCIPAL. This is a neg amortizatio loan where the principal balance INCREASES - BAD STUPID LOAN - all loan documents fully disclosed this
3. FNMA/FHLMC - The FEDS made up the lending rules ie if someone has good credit DO NOT get paystubs or bankstatements..don’t need ‘em. Their automated systems DU and LP told the loan officer and underwriter exactly what documents were needed in the file and we all followed their rules. Now we are the bad guys...sound familiar?
4. FHA - the only problem that FHA ever had was in 1998 (Clinton) they decided that the seller could gift the borrower the down payment and closing costs as long as they were laundered through a non-profit agency. This was known as Down Payment Assistance and allowed the FED Govt! This was crap!
Those who truly earn the right to own their own home should be allowed to do so as long as they have some skin in the game and 3-3.5% has been historically very solid. VA allows 0% down. The difference is the calibre of borrower and their level of responsibility.
ditto
I wouldn't even bet on that, unless I knew this latest change to the change wasn't loaded with waiver language.
That's the way these clowns operate. Say one thing, do another. They can't help themselves.
Little friggin’ late.
That's the way these clowns operate. Say one thing, do another. They can't help themselves.Probably very true.
# 1 absolute truth about politicians.
Never listen to what they say, watch what they do !
Correct, when Jorge Bush and Mel Martinez cut a deal with Franklin Rains this BS started.
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