Will tighter standards from Fannie Mae hinder the recovering housing market?
Yes. (82%, 14 Votes)
No. (18%, 3 Votes)
Total Voters: 17
Beginning October 20, 2012, Fannie MaeA government-sponsored entity operating in the secondary mortgage market. will tighten standards on the notes they purchase, meaning lenders will have to increase homebuyer qualification standards to ensure their ability to sell these notes to Fannie. The changes include higher Fair Isaac Corporation (FICO) scores for adjustable rate mortgages (ARMs), and more documentation to verify income.
Changes to ARM transactions include:
an increase in the minimum FICO score from 620 to 640;
the maximum loan-to-value ratioA ratio representing the outstanding loan balances versus the current fair market value of the mortgaged property. (LTV) for one-unit, principal residence, purchase and limited cash-out refinances will be 90% for both desktop underwriting (DU) and manually underwritten loans(reduced from 95% and 97%, respectively); and
the majority of ARM transactions will have maximum LTVs of 10 percentage points less than previously, not falling below 60%.
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