Loan limits will likely go up to $625K in 2022, but FHFA hasn’t announced it yet. Still, higher home values have convinced some lenders to boost loan limits now.WASHINGTON –
Fannie, Freddie Tighten Some Mortgage Standards ☘ Hoey Team ☘ eXp Realty
Dated: April 3 2020
Fannie Mae and Freddie Mac announced Tuesday that they are offering several “loan processing flexibilities” but will in the meantime tighten other lending standards.
For example, the two government-sponsored enterprises are changing the date requirements for income and asset documentation required in processing loans that they purchase. All income and asset documentation must now be dated no more than 60 days from the date of the mortgage note. Previously, that was set at 120 days.
The change was “to ensure that the most up-to-date information is being considered to support the borrower’s ability to repay,” Fannie Mae said in a statement.
Fannie Mae and Freddie Mac also announced changes to income verification requirements for self-employed borrowers that is a significantly tighter time span for reporting income than previously. A lender used to be able to verify a borrower with self-employed income no more than 120 days prior to the mortgage note date. That period has been moved up to just 10 days.
“Due to the impact the COVID-19 pandemic and the various social distancing measures implemented by different jurisdictions are having on many businesses across the country, sellers must now take additional steps to confirm that the borrower’s business is open and operating within 10 business days prior to the note date,” Freddie Mac wrote in guidance.
The GSEs also made changes to their policies on stocks, stock options, and mutual funds and how these can be considered as assets for a down payment or closing costs.
Fannie Mae and Freddie Mac noted these are temporary credit underwriting requirements that will be effective for mortgages with application dates on or after April 14. They will remain in place until May 17.
On the flip side, Fannie Mae and Freddie Mac have announced easing lending standards in several cases in light of the COVID-19 pandemic. They’re now permitting desktop appraisals on new construction loans, an expansion of the use of power of attorney and remote online notarizations, and a moratorium on evictions and foreclosures.
Article content from our National Association of REALTORS (NAR) Newsletter Magazine, and from other sources including Fannie mae, Freddie Mac and Hoey Team ☘
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