WASHINGTON – Dec. 2, 2014 – In response to new guidelines from Fannie Mae and Freddie Mac effective Dec. 1, home lenders are expected to further loosen standards for borrowers and give thousands of additional customers access to a mortgage loan.
The guidelines clarify penalties for mortgage errors if loans are sold to Fannie and Freddie – what is, and what is not, misconduct in the lending business.
Prior to the new rules’ release, the strict “qualified mortgage” rules rattled banks, and many created guidelines that went above-and-beyond the basic requirements, fearing that any misunderstanding would lead to bigger problems down the road.
However, the new orders effective yesterday give lenders less reason to worry. As a result, some experts predict that it will get easier for marginal borrowers to secure mortgage approval.
Wells Fargo and SunTrust are among the lenders that say borrowers should begin to see changes in a matter of weeks, such as faster turnaround times for processing mortgage applications. Lenders are also expected to lower credit score requirements and be more flexible if a borrower’s credit was hurt by a job loss, large medical bill or other one-time event.
Mortgage Bankers Association President David Stevens says the guidelines mean that “some lenders are lifting almost all of their overlays” – the bank’s current requirements that exceed Fannie and Freddie’s requirements.
Source: Wall Street Journal (11/28/14) Light, Joe
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