Virginia mortgage rates and industry news

With record numbers of foreclosures and "short sales" in the past 2 years, Fannie Mae will now be implementing new underwriting guidelines starting August 1, 2008.  For buyers looking to purchase a new home, or real estate agents working with these types of credit buyers, these changes will dramatically affect the likelyhood of a mortgage approval. 

With the exception of a handful of small, portfolio lenders and sub-prime mortgage banks, almost every loan originated these days is run through Fannie Mae's DU underwriting engine, or Freddie Mac's LP underwriting engine (which will almost certainly follow suit with these new changes) to obtain an approval. With that said, borrowers will not easily be able to "escape" these new guideline changes.

I will outline the current guidelines and the "new" guidelines below so you can see what changes have taken place.  There will be "exceptions" granted on the new guidelines for extenuating circumstances as they relate to foreclosures, however those circumstances must be valid and heavily documented. 

VERY IMPORTANT NOTE:  If you've had a fairly recent foreclosure or short sale and need a mortgage, the time to act is NOW.  Don't wait until August 1st.  These new guidelines may prevent you from obtaining the financing you need!

FORECLOSURES 

Current Guidelines

• 4 year time period from the date the foreclosure sale was completed

New Guidelines

• 5 year time period from the date the foreclosure sale was completed

        Additional requirements

• Between years 5 and 7 after a foreclosure, the purchase of a principal residence is permitted with 10% down payment and a 680 middle credit score
• The purchase of second homes and investment properties is not permitted
• Cash out refinances are not permitted for any occupancy type

"SHORT SALES" or PREFORECLOSURE SALES

Current Guidelines

• No existing policy in place - at the bank or investor's discretion

New Guidelines

• 2 year time period from completion date with no additional requirements
• No exceptions for extenuating circumstances will be granted

PAUL THISTLE, PRESIDENT

www.loanplanet.net  paulthistle@loanplanet.net

(703) 753-5747