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Fannie Mae has implemented a new policy that is very important. Since most lenders use FNMA’s guidelines this is an important change to be aware of. As of June 1, lenders are responsible for certifying the borrower’s monthly obligations have not increased from the time of the initial credit report through the closing date.
This is effective for new conventional applications only and is not applicable for VA, FHA or Rural Development loans at this time. However, they could follow suit.
For Fannie Mae, the goal is to reduce the number of loans that default because of new, non-disclosed debt.
Lenders have the freedom to verify in whatever manner they wish, but in most cases, the verification process will amount to a credit re-pull made just prior to closing. A credit report will be pulled at the beginning of the application and will also be pulled 5 days prior to closing.
What does this mean for the conventional borrower? It means that you absolutely should not take out any additional credit or even have an inquiry into your credit report from the time you start the loan application until after you close.
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Windermere Real Estate, Sun Valley – Hailey, Idaho @ George Martin, Jr. Associate Broker