Fannie Mae has issued new guidelines that will be effective September 1, 2009.  Mortgage approval guidelines will tighten up even further.  You can expect that these strict new lending guidelines will make refinancing and purchasing a home slow down even more. Plan on a 45 day turn around to close all loans.

Interestingly, FHA loans will not be subject to the new guidelines...they say it simply will not work.  So we will see over the next few months.

Some of the changes that you can expect include:

  • Assets, income and credit documentation can not be more than 90 days old.
  • Lenders will have to actually compare federal tax returns from the IRS to a borrower's supplied income documentation...and we all know that the IRS is easy to work with.
  • If you earn tips and plan to use it as part of qualifying, it must be verified and documented...just how do you do that if you haven't planned to buy a home for over a year?
  • Stocks, bonds and mutual funds are worth only 70% of their current market value, if being used as your reserve funds...as if their value isn't down enough already!
  • Retirement assets are counted as only 60% of their current market value...does the Government think that these securities are going to go down even further?  Sounds like it to me.
  • Refinancing and new buyers of multifamilies are facing higher credit score requirements and even lower loan to value maximums when purchasing.  In my opinion, this totally stalls the already struggling multifamily market.

If you are considering a loan for a new purchase or a refinance, consider getting in before September 1 to avoid the new restrictions.  Call a good loan officer NOW!