Mortgage Loan Underwriting: Research Demonstrates That “Sound Underwriting And Dcoumentation”, Not Higher Down Payments, Is Key To Lower Foreclosure Rates

4 08 2011

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Mortgage Loan Underwriting: Fannie Mae Guidelines Allow For 95% LTV On Purchase And Rate/Term Refinance For 1-Unit Properties; 85% Loan-To-Value For Cash-Out Refinances

13 06 2011

FHA Underwriting Guidelines: A Homebuyer’s “Liquid Assets” Are Evaluated By “Desktop Underwriter” (DU) Decisions Which Count Verified Gift Funds Toward Funds To Close And Excess Gift Funds As Reserves; Certain Types Of “Cash-On-Hand” Are Acceptable Source Of Funds

7 04 2011



Conforming Mortgage Loans Have Outperformed Jumbo Loans Since 2008 After Underwriting Standards Deteriorated

16 01 2011

“…the deterioration of underwriting standards for residential mortgages during the boom resulted in woeful credit performance…”

“… serious delinquency performance of conforming mortgages—with a maximum LTV of 80%, good credit, under the loan size limit and fully documented—and non-conforming prime mortgages since the beginning of 2008 have diverged widely, with Fannie Mae reporting serious delinquencies of 4.5% in its conforming pools, and CoreLogic non-conforming data showing 90-day plus delinquency rates of over 15%”

  • Subprime mortgages, needless to say, have performed even worse: the Mortgage Bankers Association subprime index now has a 26.2% delinquency rate.)
  • As policymakers consider the future of housing finance, it is worth recalling that the conforming mortgage—which is wrapped by the government guarantee—has performed far better than other sectors of the market.

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FHA 203k Loan Draw Requests: How To Access Funds In FHA 203k Home Renovation Loans

12 01 2011


Fannie Mae Releases “Desktop Underwriter” (DU) Changes Which Feature 7-Year Foreclosure Seasoning, 2-Year Seasoning For Short-Sales And All Installment Debt Payments Counted

22 12 2010

The new updated Fannie Mae Desktop Underwriter (DU) has been released. The following DU changes were effective December 11, 2010.  Changes are as follows: 

  • 7 year waiting period for foreclosures.  
  • 2 or more years seasoning required if a short sale, deed in lieu, pre foreclosure event is showing on the credit report. 
  • Rounding of LTV, CLTV is limited to 2 decimal points and will be rounded up to the next whole percentage. 
  • Interest only community seconds are not allowed. 
  • 97% LTV available with financed MI (Flex 97 goes away); 3% borrowers own funds are required. 
  • Minimum borrower contribution on 2-4 units, 2nd homes, high balance mortgages must have 5% borrowers own funds. 
  • All debts will be counted in the DTI for installment accounts regardless of the number of months left.  Paying down to 10 months is no longer allowed.  If paying off a revolving account to qualify, proof account has been closed to further activity is required prior to funding. 
  • All condo projects must include unit number. 
  • Interest rate tolerance message has been eliminated.  Actual interest rate must show on final DU findings and all systems must match.  If the rate changes, a new AUS is required to reflect the actual rate. 
  • If credit report shows revolving/installment lines of credit with a zero balance there is no need to include a debt payment. Underwriting Update: Fannie Mae Announces Mortgage Underwriting Changes Affecting Gifts And Debt-To-Income Calculations

3 12 2010

Fannie Mae announced some changes to their loan guidelines. Some of the changes make it easier to get that home loan you’re looking for, while other make it tougher.

  • Gift or grant funds of 5% are now acceptable from non-profits. This has always been a particular sore spot with sales agents, borrowers and lenders. While Fannie agreed to accept grant funds, extra diligence is required to determine if your lender will accept the grant.
  • If mortgage insurance is required, the MI company may not accept the grant. Thus while your lender may take it, the MI company is another cook in the kitchen with veto power over the approval.
  • Fannie adjusted its debt-to-income ratio down to 45% from 55%.
  • Fannie announced changes to the manner in which it would use debt in the ratio, when the debt has ten payments or less to payoff.
  • Lenders have routinely exempted debt, revolving, mortgage, installment, etc., that could be paid off in less than 10 installments. This change seems to take this exemption away and force lenders to add the debt service back to the DTI calculation, making it tougher to qualify
  • Fannie Mae changes do not reflect the so called “investor overlays” that are tougher than the normal program guidelines.

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