Fannie Mae changes mortgage loan restrictions

Government-backed mortgages with Fannie Mae will soon undergo new changes through Desktop Underwriter (DU), an automatic program that follows strict guidelines without input from lenders. The new changes will increase flexibility for certain borrowers, but they'll make it harder for others to qualify due to loan limits, restrictions and more costs.


Higher costs
The current downpayment for Fannie Mae conforming loans is 3 percent, but it will increase to 5 percent for loans submitted after Nov. 16. Some homeowners may not be able to afford 5 percent on a downpayment, and many have been attracted to Fannie Mae loans because the cost was so low.

The increase could deter some first-time homebuyers from applying for a Fannie Mae loan. However, the loans won't have upfront mortgage insurance costs, unlike current loans with a 3 percent downpayment and FHA mortgages.

Mortgage terms
In addition to higher downpayments, loan limits have been reduced so that no mortgage can have as term longer than 30 years, as opposed to 40.

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October 17 2013 - Boca Raton
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Interesting post Ele. Rumor has it that FHA may be lowering there DTI ratios Jan. 1, which will cut down a lot of buying power for my clients. :/  
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October 17 2013
Interesting post; however, a little bit of putting the cart before the horse.

Everything you have put forth is part of the QM (Qualified Mortgage) or QRM (Qualified Residential Mortgage) portion of the notorious (sorry, I really have loved this legislation...lol) Frank-Dodd Bill.  It is mandated to go into effect January 10, 2014.

However, there is expectation that final rulings could impact how the ruling actually rolls out and those hearings are planned for the end of October.

The point is that there is really no way to know exactly how the law will finally be implemented and lenders are waiting for the paint to dry before they roll out specific guidance.  Since, we do not know exactly what/how we will be impacted, it seems a bit premature to counsel the home buying public on potential changes.

I am not trying to be negative....actually, quite the opposite.  I have experienced many "negative" rulings during my career and there is usually a solution found at the end of the day.  I just find it a complete waste of time plotting or lamenting changes that may/may not ever happen.

Today, all is well.  Guidelines are actually relaxing, for the most part.  Love the new Back to Work program through FHA...it is allowing for many people to return to home ownership.  All is not lost......

All my best,

Deborah
NMLS #279125
WJ Bradley

"We Listen.  We Care.  We Deliver."
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October 18 2013
 
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October 18 2013 | 2 answers
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