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October Surprise: Largest U.S. mortgage lender tightening restrictions

 
Anonymous Coward
User ID: 1517670
United States
09/29/2012 07:21 PM
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October Surprise: Largest U.S. mortgage lender tightening restrictions
I have inside information that Fannie Mae will significantly tighten lending restrictions beginning in mid-October. These changes include requiring a minimum of six months of reserves, additional proof of income, verification of funds to pay off charge accounts, new LTV ratios, and generally much more documentation. I don't have in-depth financial, lending, or real estate experience, so I'm hoping those that do will be able to weigh in on the meaning and impact of these changes.

Here's the memo from Fannie Mae:

[link to www.filedropper.com]
Judethz
Israel is Eternal

User ID: 20521597
United Kingdom
09/29/2012 07:27 PM

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Re: October Surprise: Largest U.S. mortgage lender tightening restrictions
9teen Right now I don't think that it's a good idea to get a mortgage because the other shoe is yet to drop. Besides which even if you have equity, whats it worth if half the homes in your neighbourhood are in foreclosure.

In the end the value of your home depends on the economy, your better off renting, for now at least.
Anonymous Coward
User ID: 24599086
United States
09/29/2012 07:28 PM
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Re: October Surprise: Largest U.S. mortgage lender tightening restrictions
If they did that from the get go then maybe we wouldn't be in this mess !
Anonymous Coward
User ID: 10393879
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09/29/2012 07:29 PM
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Re: October Surprise: Largest U.S. mortgage lender tightening restrictions
Im not downloading shit from that site. Copy and paste it OP
Anonymous Coward (OP)
User ID: 1517670
United States
09/29/2012 07:38 PM
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Re: October Surprise: Largest U.S. mortgage lender tightening restrictions
Im not downloading shit from that site. Copy and paste it OP
 Quoting: Anonymous Coward 10393879


It's a PDF, but here's the text of it.


FNMA UPDATES
Effective October 20, 2012
EXPANDED LOAN APPROVALS:
All expanded Approval recommendations will be discontinued. DU Refi Plus
loans will still receive EA-I, EA-II And EA-III.
OLD DU Recommendations NEW DU recommendations
Approve/Eligible
Approve/Ineligible
After the Borrower has made 24 mortgage
payments (all current) can do a rate/term
refinance and a cash-out refinance. DU
Refi Plus & Refi Plus eligible
Refer with Caution
EA-I/Eligible
EA-1/Ineligible
EA-II/Eligible
EA-II/Ineligible
EA-III/Eligible
EA-III/Ineligible
Refer with Caution
Out of Scope Out of Scope
Error Error
TWO UNIT PRINCIPAL RESIDENCE:
The loan to value for a two unit principal residence has increased to 85% LTV for
purchases and rate/term refinances.
OLD NEW
LTV purchase or rate term refinance
Principle residence 2-4 unit = 80%
LTV purchase or rate term refinance
Principle residence 2-4 unit = 85%
APPRAISAL DOCUMENTATION
DU will eliminate all exterior-only appraisals and DU Property inspection reports.
OLD DU Recommendations NEW DU recommendations
Exterior-Only Inspection – 2055
Exterior-Only Condo Inspection – 1075
Exterior-Only Coop – 2095
DU Property Inspection Report – 2075
Uniform Residential Appraisal – 1004
Condominium Appraisal – 1073
Coop Appraisal – 2090
Manufactured Home – 1004C
Small Residential Income Appraisal - 1025
Uniform Residential Appraisal – 1004
Condominium Appraisal – 1073
Coop Appraisal – 2090
Manufactured Home – 1004C
Small Residential Income Appraisal - 1025 PROJECT APPROVAL
Elimination of limited project reviews when the LTV/CLTV/HCLTV is greater than
80%. DU will require a full review which requires the condo questionnaire, current
yearly budget and the master insurance policy.
OLD NEW
Possible Limited Review for condo’s above
80% LTV/CLTV/HLTV for primary
A full review will be required for condos
with a LTV/CLTV/HLTV greater than
80%. This requires the condo
questionnaire, annual budget and master
insurance
DU REFI PLUS
SOCIAL SECURITY NUMBER MATCH
The social security match required for a DU Refi Plus will be changed from having all 9
numbers matching to having 8 numbers matching to the old loan on record with FNMA
OLD NEW
One of the borrowers social security
numbers had to match exactly to FNMA
records – all 9 numbers
One of the borrowers social security
numbers need to match FNMA records
with 8 numbers.
30 DAY CHARGE ACCOUNTS
If the borrower is showing a 30 day account such as American Express, they will need to
document sufficient funds to pay the balance. This is not a change, but will now be
enforced. The borrower will not have to pay it, but verify that they have the funds to be
able to do so. If it is a business account, they will have to get their expense check
deposited to show sufficient funds. If the business is actually paying the bill, we will
need 12 months canceled checks. DU will include this balance in Total Funds to be
verified.
OLD NEW
Open 30-day charge accounts must be
paid off at or prior to closing if:
• the borrower is unable to document
sufficient assets to cover the unpaid
balance, or
• the borrower is unable to document that
the charges will be reimbursed by his or
her employer
DU did not condition for the verification of
funds
Open 30-day charge accounts must be
paid off at or prior to closing if:
• the borrower is unable to document
sufficient assets to cover the unpaid
balance, or
• the borrower is unable to document that
the charges will be reimbursed by his or
her employer
DU will condition for the verification of
fundsINCOME DOCUMENTATION
DU requirements for verification of income will be updated to align with a manual
underwrite.
Purchase / Rate/Term Refinance and Cash-out Refinance Documentation
INCOME TYPE OLD NEW
Base salary (salary or
hourly)
Paystub OR
Paystub + recent W-2
Paystub + W-2 covering
most recent year
Bonus, Overtime, and
Commission < 25%
Paystub OR
Paystub + recent W-2
Paystub + 2 yr W-2’s for
most recent 2 years
Commission > 25% Paystub + W-2 + personal
tax returns for 1 year
Paystub + W-2 + personal
tax returns for 2 years
Self – Employment Personal returns for 1 year Personal and Business
returns for 2 years
Second Job, Not selfemployed
Paystub and 2 years W-2’s Paystub and 2 years W-2’s
Second Job, Self Employed Personal returns for 1 year Personal and Business
returns for 2 years
DU Refi Plus Documentation
INCOME TYPE OLD NEW
Base salary (salary or
hourly)
Paystub Paystub
Bonus, Overtime, and
Commission < 25%
Paystub Paystub
Commission > 25% Paystub + W-2 + personal
tax returns for 1 year
Paystub + W-2 + personal
tax returns for 1 years
Self – Employment Personal returns for 1 year Personal returns for 1 year
Second Job, Not selfemployed
Paystub and 2 years W-2’s Paystub and 2 years W-2’s
Second Job, Self Employed Personal returns for 1 year Personal and Business
returns for 2 years
OTHER SOURCES OF INCOME
There will be additional options for “other income”. These must be input correctly so
that DU fires the correct documentation. The following other income sources will be
added to the drop down box. Please note that any loan previously run in DU prior to Oct
20 cannot have these added. DU will not recognize them as income.
Capital Gains
Employment-Related Assets
Foreign Income
Royalty Payment
Seasonal Income
Temporary Leave
Tip Income RESERVES FOR 2-4 UNIT PRINCIPAL RESIDENCES
A minimum of 6 months reserves will be required on all 2-4 unit principal residences.
There will be certain instances that the underwriter will need to manually calculate the
reserves. Specifically when the principal residence is a pending sale or they are
converting it to a second home or investment property. Also a manual calculation will be
required for all second home and investment property transactions.
OLD NEW
DU would allow for fewer reserves
depending on the strength of the file.
6 months reserves will be required
regardless of the strength of the file.
ALIMONY & CHILD SUPPORT
OLD NEW
Documentation of receipt for a minimum
of 6 months is required; however, the
lender was allowed to follow the 3 month
requirement in DU
Documentation of receipt for a minimum
of 6 months is required. DU will be
updated to reflect the correct # of months
OTHER NOTES ON THE UPDATE
The update will fine tune some of the conditions in DU and update conditions that are no
longer applicable since announcement 2012-04 was issued. The update will update the
disputed tradeline logic. This is supposed to then issue the disputed tradeline message on
fewer loans.
The findings report will have several new fields. It will show the first submission date
and the current submission date. It will also improve the Funds section.
Anonymous Coward
User ID: 14564403
United States
09/29/2012 07:41 PM
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Re: October Surprise: Largest U.S. mortgage lender tightening restrictions
Interesting and thanks.
Anonymous Coward
User ID: 14564403
United States
09/29/2012 07:55 PM
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Re: October Surprise: Largest U.S. mortgage lender tightening restrictions
bump
Anonymous Coward
User ID: 14564403
United States
09/29/2012 08:00 PM
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Re: October Surprise: Largest U.S. mortgage lender tightening restrictions
Real estate will collapse another 30% if this true.
DERP

User ID: 1267719
United States
09/29/2012 08:37 PM
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Re: October Surprise: Largest U.S. mortgage lender tightening restrictions
I have inside information that Fannie Mae will significantly tighten lending restrictions beginning in mid-October. These changes include requiring a minimum of six months of reserves, additional proof of income, verification of funds to pay off charge accounts, new LTV ratios, and generally much more documentation. I don't have in-depth financial, lending, or real estate experience, so I'm hoping those that do will be able to weigh in on the meaning and impact of these changes.

Here's the memo from Fannie Mae:

[link to www.filedropper.com]
 Quoting: Anonymous Coward 1517670


October Surprise is the annihilation of mankind by extraterrestrial forces.
Judethz
Israel is Eternal

User ID: 20521597
United Kingdom
09/29/2012 09:04 PM

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Re: October Surprise: Largest U.S. mortgage lender tightening restrictions
October Surprise is the annihilation of mankind by extraterrestrial forces.
 Quoting: DERP


lazyskate Yum yum, I love nibbling on toes.
Anonymous Coward
User ID: 24242029
United States
10/07/2012 01:01 AM
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Re: October Surprise: Largest U.S. mortgage lender tightening restrictions
Yes this is true. My mother in law inquired only a few days ago about getting a mortgage. This is what they said to her """Let me tell whats going on right now. They are now going to require a 6 month reserve in your bank in addition to 20% down if you want a decent rate""" That works out to about $23-$24k on a $100,000 house. Who can save that in this economy?
Anonymous Coward
User ID: 23011194
United States
10/07/2012 01:23 AM
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Re: October Surprise: Largest U.S. mortgage lender tightening restrictions
probably a good thing. there's no way i'd sign a mortgage right now. You could lose your job tomorrow...

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