Fannie Mae is tightening its underwriting criteria by raising the minimum credit score for automated underwriting (Desktop Underwriter) from 580 to at least 620 for all loans, justified on the grounds that this action “will support prudent risk management and better ensure sustainable homeownership.” Even higher minimum credit scores may apply for both manual and automated underwriting, depending on factors such as the loan-to-value ratio and the number of units in the structure. The minimum credit score applies to all mortgage loans delivered to Fannie Mae, including FHA and other government-backed loans. Fannie is also changing the maximum debt-to-income ratio for Desktop Underwriter to 45 percent, but will allow 50 percent if there are “strong compensating factors.” Other changes are also being made, as described in relevant Fannie documents (see below).
The new Desktop Underwriter Version 8.0, including the new underwriting criteria, takes effect the weekend of December 12, 2009. The revised minimum credit scores are already in effect for manual underwriting.
Did you know that the entire process of signing real estate sales/lease documents can be done electronically? The National Association of Realtors has just announced a partnership with Docusign, the leading electronic signature provider, to help facilitate the process. The process of getting multiple signatures on documents from principles spread out geographically can now take minutes instead of days/weeks. The process is very easy and is widely recognized by lenders and others involved in a typical real estate transaction.
The partnership with Docusign provides Realtors with a discount on the service that can be used by their clients and customers to facilitate transactions. Read the full press release!
This news was a little lost in the shuffle of excitement of the home-buyer tax credit being extended. This is very good news for the higher-end of the real estate market.
Legislation extending temporary FHA, Freddie Mac, and Fannie Mae loan limits was signed into law last week as part of a “continuing resolution” budget bill. The loan limits, set at 125 percent of local area home prices and capped at $729,750, are extended until Dec. 31, 2010. The loan limits were set to expire at the end of 2009 and would have dropped significantly, making mortgage financing harder to get for more borrowers at a time when housing sales are showing signs of recovery. “These higher loan limits will help motivate qualified home buyers to purchase in high-cost markets,” says NAR President Charles McMillan in a statement thanking Congress for its quick action
The U.S. Senate voted yesterday to extend unemployment benefits for 14 more weeks (20 weeks in states with very high unemployment rates), which would impact more than 1 million Americans scheduled to lose their unemployment benefits in the next few weeks. In that same bill (S.A. 2712), the Senate also approved extending the first-time homebuyer tax credit through April 30, 2010 (as long as they have a ratified contract, they have until June 30th to close) and adding a provision that move-up homebuyers who have been in their homes for five years or more can earn a $6500 tax credit as well. There are a few more provisions, so click the link below to see the write-up from Senator Patty Murray’s office (D-WA), a co-sponsor of the bill.
The House is expected to vote on the bill this afternoon, which hopefully means it will get to the President for signature on Friday.
http://murray.senate.gov/housing/homebuyer.pdf