Fannie Mae Guidelines To Change December 13, 2010

Mortgage Guidelines Are Changing

Conforming mortgages are loans that, literally, conform to the lending standards set forth by Fannie Mae and Freddie Mac.

What's New With The Guidelines : A "Cheat Sheet"
Effective December 13, 2010, Fannie Mae adds new bumps to the lending landscape, and takes others down.

Guidelines are changing across 9 separate areas of the mortgage approval process. Collectively, the updates figure to impact nearly everyone in want of a conforming home loan. They run the gamut from income and assets to documentation and reporting.

A few of the more major changes:

•The 97% "Flexible Mortgage" is eliminated, replaced by a standard 97% loan subject to loan-level pricing adjustments
•Borrower "minimum contributions" are eliminated for 1-unit purchases with at least 3% down. Gifts and grants are permissible sources for a downpayment.
•All revolving debt must be included in debt-to-income ratios, regardless of whether there's "10 Payments Or Less". If there's debt, it must be counted.
•A 5% monthly payment against the balance must be assumed when no minimum monthly payment can be verified via the creditor, or the credit bureaus.
Furthermore, the new guidelines contain a note that former homeowners with a foreclosure on record must wait 7 years before re-applying for a conforming mortgage.