Changes in how real estate mortgage loans and closings are processed just keep coming. The latest lender mandate from Fannie Mae affects loan applications made after June 30, 2010. Realtors®, home buyers and homeowners who are refinancing should be aware of how the new rules may affect them.

Lenders will now be required to do a "soft" credit re-pull (soas not to affect the borrower's credit score) as well as a re-verification of employment, intent to occupy and social security validation, and to check the parties' names against a HUD/GSA "excluded party list." Negative findings in any of these areas could trigger the re-underwriting of the loan and a need for additional documentation. This, of course, could delay the closing or even cause it to be suspended. For example, any change in debt-to-income ratios of 2% or more (even less if the loan exceeds guidelines) will require a re-submission to underwriting.

Further, the discovery of any new debt delinquencies will mandate a complete credit re-pull and underwriting. If there are any new inquires shown from other creditors, it must be certified that these did not result in new debt. There are also specific requirements regarding business tax returns and cash flow analysis for borrowers who own more than 25% of their employing company, and full disclosure of child support and alimony obligations.

To protect against such issues delaying or suspending the closing, borrowers should be careful to provide complete disclosure when applying for a loan and should not apply for or incur additional debt prior to the closing. Changing jobs during the processing of a loan or prior to the closing could also be problematic. Any changes whatsoever should immediately be brought to the lender's attention.

It is expected that these policies will soon be adopted throughout the industry and will be a consideration in every mortgage loan. Borrowers should always remember that anything less than total honesty and full disclosure of factors affecting their financial qualifications could delay or suspend the closing, or, even worse, be construed as mortgage fraud.

Source: RISMedia's REAL ESTATE, August 2010, Important Changes to Mortgage Underwriting Could Affect Many Buyers, by Jim Dinkel and Ken Trepeta.

Bob Dohn
Coldwell Banker Residential Brokerage
140-A S. Roselle Rd., Schaumburg, IL 60193
Direct phone: 847-301-3126
Web: www.BobDohn.com

Check out the findings of a comprehensive national sample of the more than 130 million residential housing units released yesterday by the U.S. Department of Housing and Urban Development.

HUD's 2009 American Housing Survey (AHS) is the most thorough look inside the homes of millions of Americans and reveals everything from the square footage of the unit to how many homes have front porches, garages or even usable fireplaces. First conducted in 1973, the survey’s long-term design allows analysts to trace the characteristics of U.S. housing units and their occupants. "This important survey provides us a clear picture of the American home and its occupants," said Dr. Raphael Bostic, HUD's Assistant Secretary for Policy Development and Research. "The housing crisis makes clear the need for continued collection of high quality housing data to help us understand housing markets. The numbers behind this survey not only provide valuable information on the composition of our housing stock, but they also help us monitor the mortgage markets, measure worst-case housing needs, and inform our policy choices."

The 2009 AHS includes enhanced data for five metropolitan areas: Chicago, Detroit, Philadelphia, New York and Northern New Jersey. For the first time ever, the AHS also includes data on disability status of household members. The new AHS also includes two independent metropolitan surveys of New Orleans and Seattle. Last conducted in 2004, the New Orleans survey in particular will provide an in-depth progress report of the redevelopment of the metro area following the hurricanes of 2005.

Follow this link for more information: portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-138

Bob Dohn
Coldwell Banker Residential Brokerage
140-A S. Roselle Rd., Schaumburg, IL 60193
Direct phone: 847-301-3126
Web: www.BobDohn.com