This has been a very busy week for lenders, as we keep up with a lot of changes coming down from Fannie Mae. Some changes are big, and some are somewhat irrelevant, so I will try and go through some of the most important ones here.
Conventional loan changes go into effect November 16th, with a new version of DU (9.1):
1. It appears for now that after November 16th, Conventional loans with 3% down will be a thing of the past…again. This popular loan program was around for years, then went away in 2009, back again this year, and now going away again. This means that Conventional loans will now require 5% down payment again, with FHA being the alternative with 3.5% down. With the changes FHA made to their mortgage insurance, Fannie Mae was probably feeling the load of these “higher” risk loans, and decided to cut back for now. Really disappointing as it was a great alternative to a high credit score client, who did not want to get stuck with FHA’s mortgage insurance for life.
2. Underwriting will require 2 months of bank statements, instead of 1 month of bank statements. This is more of just a pain for borrowers, as they will need to have 2 months of statements scrutinized and more deposits questions and documented.
3. Area Median Incomes will change with this new version. This will affect the eligibility for the state bond program, CHFA.
4. Interest Only loans and mortgages with terms longer than 30 years are no longer an option – no one was really offering these anyways
5. For the HARP DU Refi Plus loan program, some timelines for time since a bankruptcy, foreclosure or short sales will be REMOVED. This is only for the DU Refi Plus loan program, and not traditional purchase or refinance loans. This sounds like a big change, but banks may add their own overlays to this – on top of that, it seems that most who benefited from a refinance, have already completed the transaction, so this may turn out to be no big deal after all.
Call me with any questions!